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Matt White Lyles Financial Group 1430 Broadway, Suite 1105 New York, NY 10018 (212) 237-6647 ============================================================ Payday Loans Articles Rss Feedhttp://loans.org/mortgage/articles/feed enBattlelines: The Politicians Who Are With the Payday Loan Industryhttp://loans.org/payday/articles/battlelines-politicians-with-industry

As much as money can talk nowadays, politicians are ultimately the ones with the power to implement and change policy, and incentivising their decision-making with money is an integral part of Americas current political system. This practice of donating money to our elected representatives is known as lobbying.

One of the industries that is both a donor of campaign funds and majorly impacted by policy change is the payday loan industry.

Just as other industries have found or lobbied many politicians sympathetic to their needs, so too has the payday loan industry gathered its own militia of willing political soldiers in the Payday Loan War. (While not a member of the payday loan industry, loans.orgs application can match you to a payday loan lender if youre looking for an instant loan) Here is a list of politicians who received money from the payday loan industry in the 2013-2014 election cycle according to the Center for Responsive Politics: Politician Jeb Hensarling (R-TX) Kevin Yoder (R-KS) Ann L Wagner (R-MO)

Position

Payday Loan Industry Campaign Donation Amount

Representative in the US $22,500 House of Representatives Representative in the US $17,700 House of Representatives Representative in the US $13,500 House of Representatives

Shelley Moore Capito (R-WV) Steve Stivers (R-OH) Lynn Jenkins (R-KS) Tim Scott (R-SC) Tom Cole (R-OK) Patrick E Murphy (D-FL) Patrick McHenry (R-NC) Mick Mulvaney (R-SC) Lamar Alexander (R-TN) Mike Crapo (R-ID) John Carney (D-DE) Trey Gowdy (R-SC) Kevin McCarthy (R-CA) Marlin Stutzman (R-IN) Peter Roskam (R-IL) Pete Sessions (R-TX) Mark Pryor (D-AR) Steve Fincher (R-TN) Lindsey Graham (R-SC) Vicky Hartzler (R-MO) Jack Kingston (R-GA) Mitch McConnell (R-KY) Kay R Hagan (D-NC) Joe Donnelly (D-IN) Andy Barr (R-KY) Eric Cantor (R-VA) Jason Chaffetz(R-UT) Tom Cotton (R-AR) Scott Desjarlais (R-TN) Michael G Fitzpatrick (R-PA)

Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Senator Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Senator Senator Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Senator Representative in the US House of Representatives Senator Representative in the US House of Representatives Representative in the US House of Representatives Senator Senator Senator Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives

$12,500 $12,500 $11,600 $11,000 $10,400 $10,000 $7,500 $7,500 $5,200 $5,000 $5,000 $5,000 $5,000 $5,000 $3,500 $3,500 $3,000 $3,000 $3,000 $2,600 $2,600 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Michael Grimm (R-NY) Robert Hurt (R-VA) Carolyn B Maloney (D-NY) Jason Smith (R-MO) Lee Terry (R-NE) Adam Kinzinger (R-IL) Dean Heller (R-NV) Robert B Aderholt (R-AL) Marsha Blackburn (R-TN) Billy Long (R-MO) Joseph Crowley (D-NY) Mark Pocan (D-WI) Ted Cruz (R-TX) William L Clay Jr (D-MO) Jim Costa (D-CA) Dennis Heck (D-WA) Carolyn McCarthy (D-NY) Edwin G Perlmutter (D-CO) Mike Pompeo (R-KS) Nick Rahall (D-WV) Mark Sanford (R-SC) Aaron Schock (R-IL) David Scott (D-GA) Albio Sires (D-NJ) Adrian Smith (R-NE) Mac Thornberry (R-TX) Ed Whitfield (R-KY)

Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Senator Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Senator Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives

$2,500 $2,500 $2,500 $2,500 $2,500 $2,250 $2,000 $2,000 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Roger Williams (R-TX) Kay Granger (R-TX) Tim Murphy (R-PA) Scott Rigell (R-VA)

Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives Representative in the US House of Representatives

$1,000 $500 $500 $250

As the data shows, 54 Congressional Representatives in the House received the bulk of funds from the payday loan industry compared to just ten Senators. This spread is likely due to the fact that there are more Congressional Representatives than Senators since the attention both branches received is close to proportional.

In order to offer some numbers for clarity, 10 percent of the entire Senate (which has a total of 100 Senators) received campaign donations from the payday loan industry, while a close 12.4 percent of the House (which has a total of 435 Representatives) received funds from the industry.

Exactly 75 percent of the politicians are Republicans while the remaining 25 percent are Democrats.

In total donation amounts per party, Democrats received $36,500 while Republicans received $209,600.

Pundits and commonplace viewpoints tend to cast Democrats as usually supporting welfare and social safety programs, and is often touted as the party in favor of the redistribution of wealth.

Republicans tend to be cast as socially conservative, yet also in favor of creating a business-friendly economy.

While there is no doubt a large degree of disagreement over what each political party really wants, does, or stands for, it is very clear that the payday loan industry overwhelmingly gives campaign contributions to the Republican Party.

At a glance, the above chart may seem to show that a high fraction of total Senators and Congressional Representatives are in the pockets of the payday loan industry, but it is important to keep in mind that there are numerous other industries also donating to these same politicians. As these different industries vie for influencing candidates, so too does public opinion and other politicians in the two major political parties.

In total, the payday loan industry is hardly a behemoth throwing its weight around in the political arena. If it were such a mighty beast, then every state in the Union would be permitting payday loans within their respective borders, as opposed to the many states that currently ban or limit payday loans today. What the industry has paid for in these donations is not the right to dictate policy, as many would imagine, but rather the right to access politicians in positions of power.

Campaign Donations for Access Dan Greenberg, President of the Advance Arkansas Institute and former member of the Arkansas House of Representatives, said that the reality of lobbying and special interest donations is that money is being exchanged for access, not policy making power.

Those who receive donations only have a finite amount of time, and when time is scarce, I think whether donations have been made can be a factor in who legislators and other decision makers will meet with and listen to, he said.

Greenberg explained that donations tend to track incumbency more than just about any other factor.

Candidates who arent likely to get a large number of industry donations are also unlikely to win.

Also, if a candidate has won in the past, he or she is in the best position to receive donations.

In Greenbergs view, lobbying is far from legal corruption under another name.

I dont think that candidates are bought by donations or lobbyists, he said. If they could be bought, youd see a lot more donations. As a general matter, district composition, party alignment, and general philosophical disposition are much better predictors of votes than campaign donations.

Greenbergs analysis is accurate, at least as far as the going value of the dollar is concerned.

Combined, the Democrats and Republicans who received donations from the payday loan industry only received a warchest totaling $246,100. Thats not even a quarter of a million dollars in a time when a million dollars is not what it used to be.

Despite this relatively small amount of money (in terms of industry budgets), lobbying and donations are still very powerful in the world of politics.

The Power of Lobbying and Donations Dave Wakeman, Principal for Wakeman Consulting Group, works with campaign finance almost daily and in different states across the country.

I think that lobbying can be very effective, he said. In the case of payday lending, I believe that the finance industry can definitely stop the industry from being put out of business.

Wakeman foresees the possibility of traditional banks and investment banks putting their financial strength behind lobbying in support of payday lending. This is because success against payday lenders could lend strength to consumer advocates who push for change against credit card issuers that charge in excess of 29 percent interest.

If Democrats, the CFPB, and consumer advocates can successfully roll back the interest rates of payday lenders, that could give fuel to efforts to apply even stricter controls on credit cards, banking fees, and other areas of finance, said Wakeman. Finally, I believe most of the banks probably see any effort to restrict finance practices as a bad step and a slippery slope, so I am sure that they will want to help ensure that even this area of lending and finance remains as untouched as possible.

In effect, by helping to defeat consumer advocates time and time again, banks sleep peacefully knowing that they cannot focus on the next inevitable target after payday loans: credit cards.

Fortunately for banks, the payday loan industry, while much smaller than banks, is hardly a collection of cash-strapped businesses.

The payday loan industry uses campaign finance not just to defeat legislation, but also to maintain the status quo, said Wakeman. In 2012, the payday lending industry set records for the amount of money they invested in candidates that would maintain the status quo or defeat efforts to change the status quo.

Aside from the federal level, lenders have the ability to lobby legislatures at the state level and still get results. Many states and cities have used direct or roundabout ways to ban payday lenders and should expect an equal response from lenders who simply focus on winning in state Senates and Houses.

We may see a big push by payday lenders to give more campaign dollars to state and local level candidates because of the divided government at the federal level is likely to continue after the 2014 elections, said Wakeman.

Existing campaign finance laws allow industries to exercise influence on policy making. This is a prime reason why payday industry lending campaigns are focused on the House Financial Services Committee and ranking members of the Senate Banking Committee.

By bundling donations to a particular politician, the groups can gain a favorable ear, said Wakeman.

So I think the key in their lobbying efforts is to focus their lobbying in a few, high leverage spots, especially committee chairs and ranking members that can kill or make sure to fight to keep out language or rules that would be bad for the industry.

Wakemans statement is spot on.

Jeb Hensarling, the winner of the trophy for most payday loan donations, also happens to be Chairman of the House Committee on Financial Services.

Mike Crapo, who received $5,000 in campaign donations from the payday loan industry, is the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs.

While these two politicians are not entirely in control of financial policy decisions, they do sit on two very powerful political bodies that have the power to shape the fate of the payday loan industry and its consumers.

The data researched in this article is not intended to cast any one party in a negative light, or even any one politician in a negative light. Nor is it intended to show the supposed evils of the payday loan industry. Rather, it effectively shows that the payday loan industry is leaning towards giving donations to the Republican Party at a time when support for a Democratic Presidency is falling.

Hopefully consumers can recognize the influence that campaign donations play in politics by reading the chart above and, in turn, better learn how and why the battlelines in the ongoing Payday Loan War are stocked with eager, and influential, politicians.

Mon, 30 Dec 2013 20:12:32 +0000isaac3057 at http://loans.orgPayday Loan War 2013: Winners and Losershttp://loans.org/payday/articles/war-2013-winners-losers

The war between the payday loan industry and anti-payday loan activists raged across America in 2013.

This was not a war of bullets, missiles, and drones, but instead a war of legislation, political pressure, and lobbying.

Like many long-lasting wars across the ages, the Payday Loan War experienced some interesting developments over the last year.

The Consumer Financial Protection Bureau (CFPB), stretching its legs as a young government organization, let it be known that it would give proper attention to cash advance lending complaints.

In New York, the Attorney General successfully pressured a Native American payday loan company into closing its doors. Meanwhile, small cities and counties in parts of the country used zoning laws to limit how many cash advance stores could operate in their communities.

However, for online payday loans, no effective legislation succeeded at controlling payday loan lending and no states implemented new bans on cash advances.

Was there a winner in the 2013 Payday Loan War? What is America going to see in the 2014 Payday Loan War? The Winner of the 2013 Payday Loan War Unsurprisingly, the profitable and politically-connected payday loan industry came out on top at the end of 2013.

States didnt enact sweeping reforms to change payday loan lending, and at the federal level, payday loan lending is still alive and well.

Congress was far more occupied with other matters federal student loan interest rates, the NSA Surveillance Scandal, and the Affordable Care Act to be bothered with cash advance lending.

Jim Wells, President of Wellspring Consulting International, said that there were only minor legislative changes for payday loans in 2013.

Mostly nuisance actions instigated by the Presidents misguided Financial Fraud Enforcement Task force, which like most federal agencies presumes that short-term lending by non-banks is a financial crime regardless of the millions of Americans that rely on the product in the absence of bank lending, said Wells.

Consumer activists, who constantly protest against payday loans and speak out against the lending industry, failed to win any major battles against the forces of the payday loan industry.

The only notable victory this year was against Western Sky, which was forced to close its doors. This victory wasnt exactly won by anti-payday loan activists but rather by a member of New Yorks government, and hardly counts as a victory by the people against a faceless corporation.

Despite this lack of success in 2013, anti-payday loan activists will continue their well-intentioned but uncoordinated crusade in 2014.

This battle will continue on for several reasons.

Reasons to Rally First, cash advances are still seen as a curse and form of predatory lending.

Granted, there certainly are payday loan lenders who abuse rules, regulations, and state laws but that does not mean the whole industry is made up of financial predators.

Just because many name-brand banks abused mortgage lending a few years ago in the Housing Crisis, that doesnt mean America should outlaw mortgage loans.

But something should be said when even former payday loan company employees leave the industry with a bad taste in their mouths, so to speak.

David M. Barker, a former Bank Examiner and CPA, said that as a young man he worked for a small loan company that charged 36 percent APR. I felt bad charging such rates, especially when many of the customers had good enough credit ratings that they could have borrowed from a bank or credit union at rates less than 10 percent APR, said Barker. I think they are trampling down those who are already weak and susceptible. They are taking advantage of those who are ignorant, or who have made foolish credit decisions in the past.

Like many consumer advocates, Barker believes that cash advances should be outlawed along with auto title loans. He attributes the success of the payday loan industry to its power to lobby politicians, a solid feature in Americas current political system.

Granted, if, as the payday lending industry often states, a person is able to borrow $100 and pay $10 to avoid bouncing several checks, with returned check fees totaling more than $100, maybe some good came from that particular loan, said Barker.

However, positive outcomes are exceptions to the rule in Barkers experience. Instead, payday loan borrowers can fall victim to cycles of debt, especially if they borrowed from a predatory lender.

The second reason that the lending industry will see continued opposition in 2014 is that payday loans are simply being marketed incorrectly. Payday loans are in need of a clear and organized PR makeover. People still cling to the stereotype that cash advances are for urban minorities who are often uneducated and unemployed, or that they are only for emergency uses. This couldnt be further from the truth.

Until the lending industry finds a way to effectively show that payday loans are clear necessities for Americas unbanked and underbanked, there will be a continuation of the Payday Loan War. The Upcoming 2014 Payday Loan War For the time being and until an economy exists where people have such high paying jobs and good credit that they dont need payday loans, cash advances will still exist.

Naturally, people will fight over payday loans in 2014 and some of the Wars trends that America has seen in 2013 will carry over into the next year.

Trent Silver, Chief Marketing Officer of Silver Visibility, said that while the CFPB began overseeing the payday loan industry in Jan. 2012, only on Nov. 6, 2013 did they actually begin accepting payday loan consumer complaints.

America will see a continued push for increased cash advance legislation towards the end of 2013, with an increase in anti-payday lending lobbying from religious groups and attorneys generals in 2014, said Silver. Anti-payday loan sentiment is undoubtedly on the rise, but in my opinion it will lead only to a temporary push by the state and federal legislators, followed by several enforcement actions which I believe will be settled.

Enforcement actions will likely be just for show, with their sole intention being to prove that the

CFPB has muscles it can flex. Efforts to exterminate cash advance lending are likely to fall flat for one main reason.

Too many Americans provide great testimonials to the value of payday loans in their lives, as their only option, and I dont expect to see increased legislation have any lasting effect, said Silver. I believe towards the end of 2014, the industry will be back to the status quo.

In spite of 2013s clear victory and survival for the payday loan industry, there will still be some voices who argue for outlawing cash advances completely. These voices have purely good intentions.

They believe that predatory lenders, which in their estimation includes the entirety of the payday loan lending industry, deserve to be completely outlawed rather than regulated more. Outlawing payday loans would not only be ineffective, it would be damaging to many Americans.

Outlawing them completely could be wreaking havoc on the millions of underbanked Americans who rely on them and have positive, life-changing experiences through these small loans, said Silver.

Additionally, strong lobbying groups, such as the Online Lenders Alliance, have billions of dollars in funding and strong ties within Congress.

Silver explained that a source of his within OLA told him of a meeting where Senator Harry Reid was told that the payday loan lobby didnt want a certain bill to come to vote. Consider it dead, is what Senator Reid allegedly said in response. While this alleged conversation is hearsay, it is not impossible for the informed American to visualize such a scenario playing out, especially as more and more Americans become aware of how powerful lobbying is in the current political climate.

Despite the billions that the cash advance industry has in its coffers, Silver expects to see more Attorneys General facing off against the industry in order to jump on the anti-payday loan bandwagon.

I can say with certainty that payday loans have been, and will continue to be one of the half-dozen hot industries that attorneys general will continue to push regulation against nationwide, said Silver.

As for the cities and counties, such as those in Texas who tried to use zoning laws to regulate payday loan lending, Silver predicts this is little more than a game of cat and mouse. It will prove ineffective in 2014 and, at best, is a haphazard method of opposing cash advances.

This is, once again, because of the power of lobbying. State laws trump any zoning or county laws that are made. In effect, all the payday loan industry has to do is to curry favor with state lawmakers in order to circumvent any rules or laws made by a city council. When it comes to cash advances, Goliath routinely defeats David.

Some regulators and consumer advocates will continue to discuss the evils of payday loans, instead of focusing on developing alternatives or on addressing the economic reasons for why people are put into positions where they need cash advances.

Many anti-payday loan voices no doubt cheered with cries of victory upon reading of the fall of Western Sky. However, Wells believes the fall of Western Sky to be a rarity, simply a fluke in a battle waged by dollars and legislation. For the majority of cash advance companies, and especially brick and mortar stores, there will be no intimidation effect.

As for the coming 2014 year, Wells can only predict nothing but growth and clear skies for the mischaracterized payday loan industry. Even Google Ventures has announced it is investing into a cash advance company. In closing, Wells had this to say about the coming year, which is only weeks away:

The alternative lending space is exploding, for consumers and small businesses.

Fortunately in the Payday Loan War, exploding involves profits and not bodies.

Thu, 21 Nov 2013 18:24:24 +0000isaac3031 at http://loans.orgIn God We Trust: Religions Past and Current Presence in Financehttp://loans.org/payday/articles/god-trust-religion-presence-finance

Religion and money rarely mix well.

When financial controversy arises in organized religion, it usually deals with corruption, greed or illinformed spending. In recent years, the controversy has centered around several major denominations decisions to fight financial organizations and even compete with them.

One recent battle dealt with the Church of England and their decision to drive payday lender Wonga out of business not through legislative means but through competition. Statewide, many churches host financial classes and support anti-consumer loan campaigns.

Although there are current programs to enlighten and protect consumers, the religious linking of finances and faith dates back further than most know.

Many religions have sacred texts lamenting usurious charges and long-term debts, according to Lauren Bloom, an ordained minister and attorney. She said that at a base level, people are supposed to be kind to one another and for those who are lenders usually the wealthy population they should not financially deceive the poor.

Bloom said that the current economic practices act dead contrary to biblical teachings.

It comes down to not taking advantage of ignorant people and not gouging the pockets of people that dont have enough money as it is, she said. We have gone too far in this country.

But there is a large religious power that could be harnessed for this cause. The top five religions have nearly five billion followers. The top three religions carry the large majority of these members, with Christianity ranking in at 2.1 billion followers, Islam at 1.5 billion and Hinduism at 900 million.

Varying Religions, Varying Rules In a similar fashion to the varying beliefs of alcohol use, abortion or tithing, the main organized religions vary in their rules governing consumer credit. Islam is different than Christianity, which is different when compared to Hinduism.

Yet their varying beliefs seem to have a common thread that vilifies usury.

Dr. Jay Richards, a distinguished fellow at the Institute for Faith, Work and Economics and author of

Infiltrated said that a historical hatred of usury is not unique to Christianity.

Buddha denounced it and Islam still follows Muhammad in condemning it, he wrote in his book.

Both the Quran and the Bible state explicitly that usury is a sin.

As the main text in Islam, the Quran labels usury as the ninth greater sin. In the Surah li- Imran 3:130-131, it states the following: Do not devour usury, making it double and redouble and be careful of (your duty to) Allah, that you may be successful. And guard yourself against the fire that has been prepared for the unbelievers.

Christianity alone has 26 separate Bible verses that deal with usury. They span from a request to lend without expecting repayment as seen in Luke 6:35, to an exact mention in Deuteronomy 23:19, which states the following: You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.

Richards said that our modern condemnation of usury is actually a mix of religious text and ancient philosophical ideas. One of the largest influencers and critic of usury throughout history was Aristotle. He believed that money was sterile and functioned only as a means of exchange, without any actual value.

The text is absent from the Bible, but the idea that money is sterile has interwoven itself into the fabric of several major religions, Richards said.

Expanding Business and a Hard Focus on Payday Loans The world is faced with vast issues such as poverty, war and corruption, so it might seem inconsequential to focus on a small type of consumer loans, but some say the cause is just as important.

Bloom believes there is now a large divide between business and faith that should not exist.

Loans are an integral part of modern society. Although some consumers function properly without one, the majority of consumers will need some type of loan, whether for a house, a car or an education, during their lifetime.

The ability to borrow money and the desire to follow ones religion has not been overlooked. A new crop of businesses have emerged to blend both the ancient religious rules with modern needs. For instance, niche markets have risen to supplement business requests from devout Muslims, such as lenders offering Islamic mortgages.

In addition, educational groups which foster inter-religious business growth are also growing, such as Kevin Newtons business, Habbibi Consulting.

Newton said that these new businesses help financial institutions set up these arrangements that are mutually beneficial for both the bank and the believer.

Churches have also been forced to remain relevant and address issues that 21st century citizens face. One of them is financial education, Bloom said.

We are all ministers, priests but we are also citizens of the United States, she said. Our passion for

religion doesnt mean we check our brains at the door.

She continued stating that there is nothing more important that speaking out against poor lending practices and extending financial literacy.

Educational groups do focus on these items, but when the conversation leads to short-term consumers loans, like personal loans, auto title loans and payday loans, the topic gets heavy.

Bloom said its partly because payday loans violate the standard Golden Rule, which is present in most major religions, in one form or another. It states that one should treat another person as they would want to be treated themselves. She said that lenders and legislators that allow payday loans and other high interest consumer loans should ask themselves a question: Would you do this to your brother, your sister, your mother? And if not, why would you do it to someone else?

Dr. Don Nations agrees. As an ordained Elder for the United Methodist Church and founder of DNA Coaching, Nations said that Christianity does not prohibit borrowing a mortgage loan or an auto loan, but the religion does find fault with loans which exploit the poor.

There have been a lot of things which unfairly targeted lower income people and the church has typically spoken out against them, he said.

The Bible tells a story of Jesus overturning tables in a religious temple when he heard that unfair businesses practices were being conducted.

Nations said the hot button issues change over time. But positive and negative financial practices are one of the topics that needs coverage today, if only to explain to consumers that they have a choice.

People who need a lender of last resort rarely have many choices or options, he said.

It is this choice that is fundamentally important to Richards. As a supporter of consumer loans when used properly, Richards said that religions demonize small consumer loans because they dont understand the nature of money.

A misunderstanding of the nature of credit and money could lead people to be hostile when they dont need to be, he said.

Payday loans have to cost more due to the added risk for the lender. And taking away these options will not solve the problem either. Richards said that reducing the financial options of the poor does not help, and comparing APR rates of a short-term loan to the rates of a long-term loan is comparing the rates as apples and oranges.

Richards said that eliminating these options, which can be used for good if properly applied, does not make any moral sense.

If you want to think critically as a Christian, you have to understand Christian theology but you also have to understand economics, he said.

Mon, 28 Oct 2013 16:54:12 +0000rebekah3010 at http://loans.orgThe Effectiveness of Payday Loan Regulationhttp://loans.org/payday/articles/effectiveness-cash-advance-regulation

As months and years pass, the payday loan industry becomes more regulated and divided.

Most states have at least one pending law that could limit or eradicate payday lending. Some laws pass, others fail, but what happens to the state itself?

Loans.org spoke with financial writers, attorneys and consumer advocates who frequently cover the payday loan industry to see what impact the many forms of legislation have on the countrys lending economy.

The Outcome of Legislation In 2011, several pieces of legislation passed while many others died in the committee. Some of the larger changes were seen in Arkansas and Indiana.

In Arkansas, both House Bill 2021 and Senate Bill 259 were proposed to repeal the Check-Cashers Act and protected borrowers from unlawful interest rate charges. The governor signed S.B. 259 in March of 2011.

In Indiana, the approved bill was less about regulation and more about consumer education. H.B. 1410, which passed in February, required that payday lenders display their business locations on pamphlets, include a toll free contact number and a number for credit counseling, among other items.

Other laws were simply tweaks to previously signed bills. One successful bill in California was A.B. 1158 which was introduced by Assembly Member Charles Calderon. The bill, after several amendments, was passed in assembly. The existing law was changed and allowed for a checks face amount for a deferred deposit transaction to be $500. Previously it was limited to $300.

But not all states were able to claim victories over the payday loan industry.

One state that faced multiple rejections was Mississippi. Out of the nine bills that were proposed, eight died in committee. The only one that survived and was later signed by the governor, was H.B. 455. Several of the state bills that died in legislation that year were H.B. 16, H.B. 780 and S.B. 2242.

Some states do not prioritize payday regulation and only offer up one or two bills per year. One reason could be because of previous years failures.

Andrew Schrage, founder of Money Crashers, said that when New Mexico tried to regulate the industry in 2007, the laws were considered to be a failure.

The language of the law was so narrowly worded that the industry simply shifted its business model

and the nature of the products it offered, Schrage said.

Bills proposed in 2011 have predominantly passed or died by now, but 2012 gave legislators more time to construct more regulation. Some states are ahead of the game by a long shot. According to the National Conference of State Legislatures, for 2012, policymakers in Illinois created nine separate laws that dealt with payday loans.

Other states have similarly passionate lawmakers. Missouri has six separate pieces of payday loan legislation and California has three.

Although the pending legislation covers various aspects of the industry, most laws try to attack the interest rates offered by payday and title loan companies.

Jim Wells, president of Wellspring Consulting International, said this is a problem, and one of the largest, because the new legislation fails to recognize that although it can reduce availability of legal, community-based, non-bank lenders, it can do nothing to reduce consumer demand for small dollar loans.

During the beginning of the Financial Crisis, Wells said banks that were making loans to anyone who could fog a mirror suddenly became selective lenders. The aftereffect of this was that credit card accounts, credit lines, and home equity lines were closed at the time that many consumers needed them the most.

Regardless of the economy, people need small loans. Wells said that there was a thriving installment loan market made possible in the past. Firms such as Beneficial Finance, Household Finance, and The Money Store provided funds to in-need consumers. He continued stating that in states where payday firms have closed, studies have found that consumers face higher overdraft fees from nonpayday lenders.

Strict payday loan legislation can be viewed in a positive manner because it attempts to protect consumers from predatory lending. But experts besides Wells believe that our current economy and structure necessitates small consumer loans.

Jay Richards, distinguished fellow for the Institute for Faith, Work and Economics, agrees that as long as scarcity exists, there will be a need for credit. Scarcity, as a part of the human condition, will continue. The only question is where people will turn to help them overcome it. Richards wonders whether consumers will continue to access it legally or if they will be forced to turn to black markets for funds.

We do not help the poor and disadvantaged by restricting their economic options and their access to legal credit, Richards said.

Credit abuse does occur in the payday loan industry, but it also occurs in every single financial sector. Yet legislators find it necessary to burden one area and leave others wide-open.

Misuse doesnt invalidate proper use, he said.

Instead of having outside and often times illogical regulation, the payday loan industry could be regulated by the free market. Richards said that when entire socioeconomic classes are prohibited from lending options due to arbitrary criteria, it artificially restricts free competition.

The best way to have a customer friendly, competitively price market for anything, including small dollar credit, is to have free competition of individual companies doing their best to meet the needs

of consumers at a price the customers can afford, he said.

Biased Coverage Despite the long lists of bills proposed each year, very little coverage is concerned with the outcome and impact of these bills. When loans.org researched several of the passed bills mentioned earlier, few garnered enough coverage for a newstory.

Part of the issue could be blamed on the one-sided coverage told by media outlets. Wells said the news media doesnt take the time to understand the payday loan industry and the product it offers.

If the industry is not researched deeply, then it becomes generalized and improperly labeled.

The perception of poor people being taken advantage of while self-appointed activists complain is an easy storyline, Wells said. They fall into the trap of seeing banks with white hats and PDA firms with black hats.

But in reality, the industry that supposedly needs more regulation is already highly regulated. The Community Financial Services Association of America (CFSA) and the Online Lenders Alliance (OLA) both have codes of conduct for lending partners. These codes include payment plans, support, and pricing guidelines.

When a consumer needs to file a complaint about a lender, they can also turn to the Consumer Financial Protection Bureau (CFPB) who will assist in resolving the dispute.

The CFPB covers a huge sector of the lending industry, but some fear its overarching leverage.

Richards is concerned by the CFPB because of its freedom and minimal government oversight. It is not controlled by Congress or the Fed, yet it is given jurisdiction over all the financial sectors of the economy. He said that a sovereign entity such as the CFPB should not exist in the United States, a country with checks-and-balances.

Despite its name, consumers should not feel protected by the CFPB, Richards said.

Regardless of the variations of lenders, the needs of consumers and the intricacies of the laws, the payday loan industry remains a black-and-white debate. But in the near future, any further regulation or expansion of the industry will likely occur in the grey arena, where consumers request small loans and businesses find a way to provide for that need.

Thu, 12 Sep 2013 20:25:42 +0000rebekah2974 at http://loans.orgThe Winners and Losers of Payday Loan Legislationhttp://loans.org/payday/articles/winners-and-losers-of-legislation

Proposed payday loan legislation is either for or against payday loan companies. While there are few exceptions, the opposing party tends to be consumer activists. Whenever laws regulating industries, such as the cash advance industry, are put into place, there are always winners and losers.

The Payday Loan War has been going on for years. As a result, each battle has had its own winners and losers.

Consumer activists, driven by their anti-payday loan ideology, have won several victories in certain states by successfully banning instant loan financing, despite the obvious demand and need from borrowers.

Fortunately for borrowers who need payday loans, only a handful of states in the country have passed laws prohibiting payday loan lending.

Barring Lending Many payday loan laws cap interest rates. Doing so makes it unprofitable for payday loan companies to do business in areas where such laws are in effect.

While this practice does not outright ban payday loans, it makes offering them so unprofitable that some companies simply pull up their stakes and move to other locations.

However, a recent legislative trend has been on the rise, and it targets the industry on a more local level. Some cities are enacting zoning laws that prohibit payday loan retail stores from being in certain parts of those cities or within city limits at all. Similar measures have put moratoriums on the addition of any new payday loan businesses from opening, which, in effect, limits the number of lending companies within city or county limits.

These minor victories may all be for naught since the payday loan industry is taking legislative battles to state levels where it need only deal with state government officials, rather than a plethora of local officials.

Now that these multi-level battles in the Payday Loan War have been going on for so long, just who has won? Lenders or activists?

Crushed Consumers The answer is actually something unexpected: Both lost, but neither is the biggest loser.

Mark A. Larsen, expert of legal finance, risk and communication, told loans.org that that consumers, not even a faction in the Payday Loan War, have actually lost something.

Consumers lose choice, he said. The regulations typically passed are not designed to regulate but are in fact designed to destroy the industry. When costs are increased to a lender, those costs are passed on to the consumer. When making it impossible to get money locally, people go to the internet to get loans. These loans have less protection and typically dont fall under local regulations.

This allows consumers to be more vulnerable to disreputable lenders.

As Larsen says, online-based payday loan lenders are the real victors. Online, regulators are nearly powerless to stop lending websites, which may be either licensed and reputable or unlicensed and unethical.

However, for all their victories at the state and local levels, consumer activists who decry payday

loans as a bane of humanity have yet to dent the demand for payday loans.

Activists versus Banking Behemoths In fact, demand for payday loans is so persistent that massive banks with household names, such as Wells Fargo, are joining the industry and offering their own slew of instant loan products. Even though activists have had mixed success against the already multi-billion dollar payday loan industry, it remains to be seen how they will perform against the banking giants of the world.

Despite this new phase in the Payday Loan War, Larsen suspects that most new regulation will miss its mark.

Nobody is objecting to reasonable regulation, said Larsen. It is unusual for anything reasonable to come out of any state legislature. Legislation is either a knee jerk reaction to a single problem with a single company that overreacts and causes more harm than good, or the legislation is backed by competitors to payday lending that is designed to eliminate a competitor.

Despite how anti-payday loan activists ignore the clear demand for regulated and ethical instant loans, they also fail to recognize one more important fact: Massive financial juggernauts do not enter into markets with no growth, let alone no demand.

No matter what you do with payday lenders, there is still a need, said Larsen. That need will be met by someone with some product, regulated or not. Regulation should be narrowly designed to protect consumers by disclosures and limits with how much or how often a person can use the service. A better use of legislation would be to investigate why people need payday lending and try to solve the problem that leads people to need to borrow from their next paycheck.

While legislation continues to miss its mark, in the end, each activist victory in this ongoing war results in multiple losers, none of which is hit harder than the consumer who is in financial distress.

Wed, 10 Jul 2013 17:27:26 +0000isaac2922 at http://loans.orgThe Hidden Yet Positive Side of Payday Lendinghttp://loans.org/payday/articles/hidden-positive-side-cash-advance

Dana Williams no longer regards payday loans in a negative light.

When the 36-year-old travel agent began her journey with payday loans, she experienced financial turmoil repaying her debts and was forced to roll-over the loans.

But once she began to understand the short-term credit, she was able to use it to her advantage.

Now, 10 payday loans in, she said she approaches them differently. She is now prepared to repay her debts if she ever needs a new loan.

For her most recent payday loan, $700 to pay for several bills, she knew that sufficient funds were headed her way in the next couple days.

When I first started, I didnt really have much knowledge about how the financial world worked, she said of her first borrowing experiences. [As time passed] I got wiser and knew that, going in, I had to have a plan of action for how I would pay it back.

Each type of consumer funding has both positive and negative stories, but the payday industry is one that seems to rarely offer anything positive. The loans can be abused just like any other form of credit, but for a significant part of the United States, payday loans are a necessary form of assistance.

Reports are published yearly about the industry, but statistics do not show the personal side. Even academia is trying to catch up with data.

Dr. Paige Skiba, associate professor of law at Vanderbilt Law School, told loans.org that when she began researching payday loans over a decade ago, academics were unknowledgeable about the industry and its importance. She now tries to cover the payday loan industry in an unbiased, scientific way.

Payday loans are a crucial source of credit for millions of Americans, so its important for academics and policymakers, as well as consumers considering using the product to know how the industry works, what the benefits, consequences and potential pitfalls are, Skiba said.

Skiba said there are both positive and negative aspects of payday loans just as with credit cards, mortgage loans, and student loans.

The debate about banning loans doesnt usually include considerations regarding where people will turn for credit when payday loans are banned, Skiba said.

Due to her research, Skiba said she is frequently asked if payday loans are positive or negative.

It is not black and white, she said. It is a difficult calculation to make because they help some people in need, and harm some other people. There is no unequivocal evidence out there that payday loans are all bad.

The Ever-Present Need Payday loans are either condemned by state regulators or blindly promoted by payday lenders, but in the middle lies a customer base that uses this form of short-term credit frequently.

Twelve million American adults use payday loans annually according to a 2012 Pew Charitable Trusts report. This amounts to 5.5 percent of the adult population in the country.

Despite some horror stories, there are many borrowers who are grateful for the access to money at times of need.

Another payday loan customer is Valrie Cobb. Cobb, the owner of a writing service, said the assistance provided by these lenders when faced with a car problem or an unexpected bill is valuable.

It has helped me keep my utilities on because I didnt qualify for help from the social service agency and I had used all of my options with the utilities company, she said. For the past year, my car has

broken down or needed some type of repair every month, so being able to go to the loan place has kept my mortgage payments going.

Cobb said that before using payday loans, she was forced to borrow money from family members which became difficult.

Its pretty hard asking for money each month. The payday loans dont ask questions; you just qualify and they give you the money, she said.

Convenience and Last Resorts Bruce McClary, director of media relations for ClearPoint Credit Counseling Solutions, said that in his 19 years of experience in the finance industry, McClary said he has never interacted with someone with a positive payday loan experience.

As a counselor, he said he wishes he could speak with someone and ask how it worked for them.

But he continues looking.

Although he does not experience the positive side of lending, he does understand why so many consumers turn to this form of short-term credit.

McClary said that payday loan borrowers typically turn to the short-term loans because they lack sufficient savings or credit to use an alternate source. He stated that if consumers were willing to save ahead of time, or research other lending options, they would view these loans as a measure of very last resort.

McClary said that his organization recommends community-based credit union short-term loans, which carry significantly lower APRs ranging between 21 and 36 percent instead of around the 390 percent of typical payday loans.

Consumers need to be aware of these choices and plan ahead, he said.

McClary said that across the country, major lenders are creating different products to circumnavigate the legislature.

When that doesnt work, lenders try to change the regulation. He continued stating that in Washington, Money Tree is exerting significant effort to push legislation that would make some of their financial products legal again.

The sides are so divided because of the way the loans are structured and the vulnerable consumers that are targeted. McClary said that funds are given to borrowers who are unlikely to be able to repay their debts. If a consumer is short on money when they take out a payday loan, then after 14 days, little usually changes.

Guess what they dont have the funds to repay that loan, he said. And the balance grows and grows.

But McClary understands what drives consumers to these loans.

Its like getting milk at a convenience store.

If a consumer needs milk at midnight, but all of the grocery stores are closed, that consumer will visit a convenience store and pay an increased rate. If the consumer waited until the next morning they would be able to avoid the cost markup. For impatient consumers, they would rather have the

milk (or payday loan) available right away instead of shopping around for a better deal.

McClary understands the convenience factor, but still said that consumers should take a 24-hour cooling off period for any financial decisions.

If you make a decision in haste, you are always going to lose, he said.

Williams learned this lesson at the beginning of her borrowing days. She is now more aware of how the process should work. And although she does agree that interest rates on payday loans are too high, she doesnt feel that states should ever ban the loans.

There should be legislation on how much interest rates they can charge but not get rid of them altogether, Williams said.

Without payday loans, despite their risk and cost, she would have been hopeless without the services help.

I wouldnt have anywhere to go, she said. I have a bad credit rating so I couldnt go to a traditional bank. I dont have any family and friends that I could borrower money from.

Fri, 28 Jun 2013 19:12:34 +0000rebekah2914 at http://loans.orgWhy the APR of Payday Loans Doesn't Matterhttp://loans.org/payday/articles/why-apr-doesnt-matter

Getting a payday loan sounds more and more like borrowing a financial ticking time bomb than money.

Most media coverage talks about how this legislation or that legislation will curb or ban payday loans. This war on payday loans has been waging across the country ever since the cash advance lending industry began booming in both the online and offline realms.

Politicians have been forced to define their positions on the matter, some claiming support, while others fight against short-term loans for people in need.

However, politicians arent the only voices in this debate.

Aside from politicians and the cash advance industry, consumer activists are the third voice in this three-party scuffle. One argument that consumer activists constantly use against borrowing payday loans is the high annual percentage rate (APR) that comes with obtaining these types of financing.

However, calculating the APR of cash advances is a completely erroneous use of interest rate calculation for a loan lasting a matter of days.

The first casualty in a war is Truth, and in the Payday Loan War that idiom unfortunately proves to

be accurate.

APRs and Interest are Apples and Oranges Payday loan APRs can be quite high on paper, but their importance for short-term loans is massively misleading. Unfortunately, anti-payday loan voices often disregard the true correlation (or lack thereof) between annual percentage rates and cash advances.

The only reason that APRs appear on cash advance financing forms is that they are required by law under the Truth in Lending Act. The legal requirement to include an APR on all payday loan documents is a vain attempt to help educate borrowers on the interest they would pay over the course of a full year.

But payday loans arent one-year loans. Cash advances are intended to only be borrowed for two weeks hence why they are lumped into the short-term loan category.

Since these short-term loans are only intended to be borrowed and repaid within a matter of days, it is foolhardy to think that their two-week interest rate should be stretched out to a year-long interest rate for the sake of political posturing.

APRs are constantly used by consumer advocates and anti-payday loan voices as an argumentative weapon in the Payday Loan War. Since this war is partially fought in the halls of Congress, it is no surprise that the erroneous use of APRs has been manipulated into a talking point by anti-payday loan activists.

That being said, this does not mean that borrowers shouldnt be told about the interest they will be paying.

Proper Interest Rates All instant loan companies should and must tell their borrowers how much they will owe and when they will owe it.

Even industry insiders agree with the need for truthful clarity. The problem, however, arises when an improper measuring tool is used to gauge the payday loan product.

Jamie Fulmer, Senior Vice President of Public Affairs for Advance America, told loans.org that even consumers feel that APRs are not appropriate indicators of the price of short-term loans.

Describing the one-time fee associated with payday loans as an annual percentage rate doesnt tell you the cost of the payday loan, but rather the cost of taking out a loan every two weeks for a year thats not how customers use short-term loans, said Fulmer. Thats like walking into the grocery store and seeing hamburger meat priced by the ton, or pulling up to a parking meter that says it costs $8,760 to park for a year instead of $1 an hour.

While we are all very grateful that we do not have to calculate the true cost of our 8 ounces of hamburger meat thats being priced by the ton, instant loan borrowers are not so fortunate.

Until sensible legislation is put into place to reflect how much interest is paid over a two week period, rather than a year-long period, the use of APRs in hollow arguments against instant loan financing that people demand will continue needlessly.

Wed, 26 Jun 2013 16:12:59 +0000isaac2909 at http://loans.orgEvolution of the Payday Lending

Warhttp://loans.org/payday/articles/evolution-cash-advance-lending-war

History books record and remind consumers about the wars waged across the world. Without a solid record, what happens to the details for sub-level wars for financial and political issues?

One such war is the battle between consumer advocacy groups and lenders over payday loans.

Very few payday lenders existed two decades ago. In that time frame, the whole concept of consumer credit has altered the lending industry.

Payday lending is now a multi-billion dollar business. According to a 2012 report by the Pew Charitable Trusts, payday loan borrowers spent $7.4 billion in one year at approximately 20,000 storefronts, websites, and banks.

Similar to other heated political topics, payday lending has become a black and white topic. Most consumers and groups either support or oppose the practice. Although it is extreme, a quasi-war has erupted between the two sides that strengthen each day. Across the United States, state legislators try to limit interest rate caps in order to make payday lending unprofitable in their areas. The other side of the spectrum is the payday lending businesses that need to charge higher interest rates due to the short-term nature of the loans.

But when and where did this conflict come from, and how did it erupt into the battle that it is today?

History of the Payday Loan Industry Despite its recent exponential growth, payday lending has roots that stretch back nearly a century.

The act of extending credit against a postdated check has roots back to the Great Depression, according to the Consumer Federation of America. The term loan shark was created to describe lenders who purchased wages or salaries and used them to charge high interest rates.

Carl Packman, author of Loan Sharks: the Rise and Rise of Payday Lending told loans.org that loansharking was frowned upon and banned in certain areas, even during the Depression.

Following the Depression, both the successful and unsuccessful endeavors to regulate the industry, struggled with usury charges because the government did not spend enough time modernizing and clarifying what reasonable interest actually meant, Packman said.

It is in nobodys interest to ban payday lending if the demand is still there, said Packman. What there should be is an analysis of how that demand can be better served by responsible lenders lending at reasonable prices, and what constitutes reasonable interest. Until then, governments remain confused and consumers fall in hock to expensive credit sellers.

Little changes occurred to the industry after the Great Depression. Although clarification and regulation was needed, the opposite happened three to four decades later. Lenders were given more and more freedom without enough thought into the outcome.

Federal banking laws passed in the 1970s and 1980s gave more freedom to financial companies such as credit card companies, mortgage lenders, and federally insured depositories, according to a Pew Charitable Trusts report.

This added freedom set the arena for the industry to expand.

Payday lending on a large scale was partially implemented due to the Depository Institutions Deregulation and Monetary Control Act in 1980. This Act forced all banks to abide by the Federal Reserves rules, raised the deposit insurance at banks and credit unions, and most importantly, allowed banking institutions to charge any loan interest rates they desired.

The federal government instated this Act to react to the rise of inflation. It eliminated interest rate limits set by each state because federal laws always override state laws.

High interest rates are the livelihood of payday lenders, and now they had a legal way to make a profit.

After the 1980 Act, the payday lending industry was able to truly grow. Deferred presentment transactions, such as payday loans, began to take off in the early 1990s and throughout the 21st century.

One online payday lender, CashAdvance.com, did not experience as much regulation when it started in 1997. Matt Becker, spokesperson for CashAdvance.com, said the industry was more open because fewer states banned payday loans.

The environment was very new, there werent a lot of people in the industry online so things were not regulated like they are today, he said. There was no OLA (Online Lenders Alliance), so it was kind of the Wild West in those days.

That decade was a logical time to enter the industry.

Consumer credit was big and the lending industry was strong. The 90s were a great time to lend as there was more trust because the economy was better, Becker said.

When payday loans took off in the early 1990s, they were offered at storefront businesses. Slowly online stores caught on, offering a national option for borrowers.

But a newer business model adopted by banks created even murkier waters for regulators. Several large banks including Wells Fargo and U.S. Bank began offering deposit advance loans which carry similar rates and rules as storefront payday lenders.

The Tension Begins Packman said the merger of payday lenders and national banks, an outcome of deregulation in the 1980s, created a growing tension in the industry.

Tension increased even further after payday lending companies expanded and began to find loopholes in state and federal laws. One such occurrence is the South Carolina Deferred Presentment Services Act (SCDPSA) which passed in 2009. Packman said the Act had the

unanticipated loophole which allowed lenders to become licensed as supervised lenders and to be governed by another set of rules.

There was some cat and mouse with the regulations which bolstered an intensified relationship, he said.

As the loopholes surfaced, the battles became stronger. Packman said federal agencies that regulated financial institutions would side with big banking institutions.

Historically, there [has] been backdoor support from banks to payday lenders, he said. The regulatory bodies have no idea how to even begin with small payday lending firms let alone firms online.

Federal Government Takes A Stand As the number of payday lenders increased at a staggering rate, more regulators began to take notice. In 2010, Congress finally took action to limit the power of short-term lenders.

State regulation does impact each individual state, but when the federal government steps in, the impact is greater than any state can ever hope to accomplish alone.

In 2010, the Consumer Financial Protection Bureau (CFPB) was created by Congress to do just that.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the CFPB which regulates the payday lending industry, among many other financial sectors.

Packman said that positive regulation, as performed by the CFPB, can inform consumers about the dangers of bad debt.

The regulation and oversight by a federal organization could not have arrived at a more important time. According to the 2012 report by the Pew Charitable Trusts, 12 million American adults took out a payday loan in 2010.

Becker said this type of regulation was simply not present 10 to 15 years ago.

In the 90s, the internet was still in its infancy for online lending so you didnt hear many stories about it. It wasnt the huge industry that it is today, he said.

Like most businesses facing an altered environment, the decision was either to change or fail.

For CashAdvance.com, the solution was to completely direct business online. In the early stages, the majority of their short-term loans were completed through a store front but as the years progressed the business migrated entirely to the internet.

Nowadays, online and storefront lenders are more regulated and are forced to be transparent.

We must follow the advertising rule set by the online lenders alliance and have our terms and conditions clearly displayed, Becker said.

Packman agrees that increased external regulation is key. He said there is a need for short-term credit, but that the payday loan industry should be regulated effectively, not overregulated.

Self-regulation is a bad idea in theory and in practice, Packman said.

Economic Benefits

Despite the strong opposition, there are businesses and consumer groups across the country that go against the regulatory grain. Payday loans can harm consumers, but the benefit of increasing consumer credit can be positive for some.

Packman said the U.S. Recession put a strain on the cost of living, decreased wages, and created a large inequality gap.

All of these things compounded make the need for credit all the more necessary, he said.

Packman did acknowledge the fact that the full outcome of the Recession is still unknown. The impact of payday loans could be viewed in a more negative light as more research is compiled about the economic decline.

Beyond the positive impact on a singular consumer, payday loans contribute to larger economic forces such as to local and state revenues. For example, Californias state economy is strengthened by $1,155,150,000 due to payday loan companies alone, representing 0.064 percent of the states total domestic production.

The Murky Future of the Industry Despite the monetary strength of the payday loan industry, its future is not as clear.

Currently, 12 states have laws that make payday lending illegal or unprofitable. Several other states have legislation waiting on approval to eliminate the consumer lending from their state.

Becker predicts the future of payday lending will be dominated by a few select companies that mostly handle business online.

Online businesses will do better in the future. There will always be a need for storefronts, but nothing compared to online, he said.

Packman agrees that online lenders are stronger than storefront lenders because state laws are harder to enforce when the jurisdiction is online.

In the end and despite their efforts, the federal government will struggle to regulate the industry on a national level.

I think there will be a cat and mouse chase for 10 years which ends in nothing being sorted, Packman said.

Fri, 24 May 2013 15:55:04 +0000rebekah2878 at http://loans.orgWhy Payday Loans Actually Help Peoplehttp://loans.org/payday/articles/why-cash-advance-actually-help-people

Payday loans are viewed by most consumer advocates as the financial equivalent of a zombie virus.

They just eat income and create a viciously repeating cycle that consumes borrowers money; much like zombies consume brains and human flesh while infecting other people into becoming zombies.

However, these allegations are simply untrue. While no one really tries to become a zombie in most fictional stories, when it comes to payday loans, people willingly borrow them.

Why would people borrow something that hurts them? It turns out most people arent hurt by payday loans because payday loans actually help people. However, misinformation has painted a very inaccurate portrayal of the payday loan industry.

Jamie Fulmer, Senior Vice President of Public Affairs at Advance America, told loans.org that misinformation frequently compares the licensed and legitimate payday loan industry with check cashers, pawn shops, and unregulated lenders.

These misconceptions, and more insidious myths spread by opponents of our industry, have resulted in a number of short-sighted conclusions about how this service works and the role and value of short-term credit in the U.S, said Fulmer.

Most stereotypes (generated by anti-payday loan activists) of payday loan borrowers tend to portray them as low-income and unemployed minorities who dont have bank accounts.

This couldnt be further from the truth.

Truth by the Numbers According to a 2010 report by Personal Money Network on the whole payday loan industry, 96.3 percent of borrowers were employed and 99.24 percent used a checking account to secure their payday loan. Clearly, being both employed and having access to a bank means that one of the key stereotypes cast by the anti-payday loan industry is inaccurate.

Another common mistake anti-payday loan activists promote is that the industry preys upon the brave men and women of the Armed Forces. Unsurprisingly, this assertion is also wrong.

Only 0.12 percent of borrowers were active duty military members. This can largely be attributed to the Military Lending Act passed by the Bush Administration, which limited the proximity of payday loan lenders near military bases. Arguments about the financial compensation of the nations bravest men and women aside, it is clear that if payday loan lenders were targeting members of the military, then their targeting methods need improvement.

Low-income stereotypes always go hand-in-hand with renters. After all, homes, being the largest slice of the American Dream, are also one of the highest signs of wealth.

It turns out that nearly 75 percent of payday loan borrowers owned property; a far cry from the nations destitute and desperate. More to the point, this data came from 2010, the height of the housing collapse and foreclosure crisis, when fewer people owed homes at all.

Just as inaccurate as the assets of typical borrowers are the stereotypical expectations about race and ethnicity.

Far from being minorities, most payday loan borrowers are young white women according to data from the Pew Charitable Trust. For all the allegations that inner city minorities of color were preyed

upon by the payday loan industry, it is clear that this is an industry that also has a white customer base and a proportionally large one at that.

However, that is not to say that the industry itself is massive.

Only 5.5 percent of American adults used a payday loan in the past five years. Hardly an epidemic of predatory lending and certainly not as foreboding as the Student Debt Crisis.

So why all the hatred against the payday loan industry?

Blinded by Hatred It seems clear that it is little more than a continuation and fragment of the anti-financial industry sentiment. Granted, massive too big to fail banks should be blamed for the role in the Great Recession, but the payday loan industry is far from acting in the role of banks.

We have found that generally the most vocal critics of our industry are those who have never used our service, said Fulmer. This presents a stark contrast to our customers, who voice overwhelming appreciation. In fact, 96 percent of my companys customers rate their experience as good or excellent in a recent customer satisfaction survey.

The cash advance works for them, he noted.

Anti-payday loan sentiment is also likely generated by the bad actions of a handful of bad lenders.

As with all industries, a few bad apples can spoil the bunch. Point in case, BP, which became a household name thanks to its gross incompetence in causing the oil spill that devastated much of the gulf of Mexico and the marine dependent economies of a large number of coastal states.

Despite this occurrence, the oil industry doesnt exactly have monthly oil disasters. More to the point, oil is still the lifeblood of industry and energy. While the world can argue for decades about whether more should be done to move away from oil dependency, the fact remains that oil is as much a part of daily life and daily used products as money and loans are.

Any form of credit can be misused or abused, and every industry has good actors and bad actors, said Fulmer.

Just because some payday loan lenders operate over state borders illegally or unlicensed doesnt mean the product itself should be illegal. By that logic, the mortgage lending abuses of some mortgage lenders should mean that from now on all mortgages shall be outlawed. Thats far from logical, far from sound, and far from practical.

People will always need mortgages just as much as they will always need quick, short-term financing like payday loans.

To apply for and borrow money from licensed and trusted lenders, you can find an application here.

Payday loans are simply a way for people who would otherwise not have access to credit or loans to get financing in time for their needs. And yes, people are in need of short-term money for everyday expenses. The Pew Charitable Trusts findings show that 69 percent of payday loans are used for regular expenses, rent/mortgage, and food.

Anti-payday loan sentiment wont go away anytime soon. So long as abusive lenders still exist and so

long as payday loan laws remain as chaotic as a field trip to a candy factory, there will be shifting moods towards the lending industry. Anti-payday loan activists should recognize that payday loans from licensed lenders actually help people. Perhaps once they do so, they can approach the legitimate licensed lenders to create a more comprehensive set of laws that will provide for a clear demand among the American people.

Mon, 06 May 2013 18:00:53 +0000isaac2836 at http://loans.orgThe Unintended Consequences of Payday Loan Regulationhttp://loans.org/payday/articles/unintended-consequence-cash-advance-regulation

Americas current approach to payday loan policy is that there isnt a current approach to payday loan policy.

While the federal government did protect soldiers from the potential pitfalls of payday loans with the Military Lending Act of 2007, there hasnt been any type of federal legislation approaching that level of regulation for civilians.

On a state-to-state level, payday loan regulation is a patchwork of regulatory levels ranging from draconian stifling to a hotbed of open lending activity.

Of course, certain states think that simply regulating the payday loan industry isnt enough. These states have instead resorted to the outright banning of payday loan financing. However, as America discovered during the Prohibition Era, and as America may even be realizing now with the War on Drugs, simply making something illegal does not erase demand. Rather, it may drive consumers to seek other ways to access what their state governments have decided to be illegal.

Certain states maintain a balance, in essence being hybrid states where regulation permits the payday loan industry to operate under certain restrictions. Unfortunately for the payday loan industry, vocal opposition groups are campaigning against them in the Payday Loan War that is raging across the country.

Just what do these groups wish to accomplish? They desire the heavy regulation, if not the total prohibition of borrowing payday loans.

Theyve already claimed victories in several states, yet how did these so-called victimized borrowers fare in the months and years after the payday loan bans took effect?

Jamie Fulmer, Senior Vice President of Public Affairs at Advance America, explained to loans.org just how ineffective these bans have proven to be.

In every case, without exception, interest rate caps and similar restrictions to short-term lending have resulted in a higher number of consumer complaints due to unlicensed, unregulated lending,

and an increase in insufficient funds (NSF) and overdraft (ODP) fees to banks and credit unionsfees that are often more expensive than our product, he said.

Non-industry statistics and data proved him right.

The Cold Hard Truth In fact, the Urban Institute found that prohibiting payday loans only led to a 35 percent decrease in payday loan usage. Driven to obtain creditdesperate evenconsumers drove across state lines and borrowed cash advances online from unlicensed sources.

Clearly, regulators did not intend for consumers to borrow in neighboring states, let alone borrow online payday loans.

The Kansas City Federal Reserve echoed the Urban Institutes findings. Its own 2007 publication found that 50 percent of consumers said that payday loans were their only option for short-term funds.

Hypothetically, a person without access to their only form of borrowing can end up jobless, homeless, or without a vehicle. For those who need money for rent or car repair, a payday loan can very well be the last resort. In the event of full-blown regulation, these respondents are simply left to their fate by lawmakers that oppose payday loan borrowing.

The publication used Georgia as an example.

Rotting in the Peach State In the middle of 2004, Georgia banned payday lending. Between the middle of 2004 to the middle of 2008, traditional borrowing actually remained lower in Georgia compared to the rest of the country.

It only grew by 25 percent while across the country it grew by 36 percent.

If Georgian regulators intended to have the former so-called oppressed payday loan borrowers rush to the arms of traditional lenders after they ban, then they failed.

The New York Federal Reserve also found that the situation in North Carolina was no better.

A payday loan ban took effect in that state in December of 2005. However, following the ban there was a rise in complaints against lenders. There was more than a two-fold increase in complaints against debt collectors.

Other states including Montana, Washington, and Arkansas have reported similar results: complaints skyrocketed as consumers turned to unlicensed lenders that charge astronomical interest rates and operate outside federal and state law, said Fulmer.

Even when similar financing was available, it was considered undesirable.

A Darker Road Ahead Regulators should be frustrated by the findings of the Cato Institute, which discovered that 55 percent of polled payday loan borrowers would rather borrow a payday loan than an identical product offered by a bank or credit union.

Worse still, regulators should be outright fearful of another alternative.

A research report from the Mercatus Center at George Mason University warned that consumers who are robbed of payday loans may land in the arms of loan sharks and other black-market operators, or they may resort to financing their expenditures via illegal, dangerous, or risky endeavors.

Clearly, a rise in illegal transactions would do no benefit to state or the national economy, let alone the wellbeing of communities.

The bottom line is that these attempts to over-regulate short-term lending harm consumers by eliminating a critical option for those in need of occasional short-term, small-dollar credit, said Fulmer.

The numbers dont lie and if they could talk, they would certainly agree. For the sake of consumers, hopefully regulators will also agree sooner rather than later.

Tue, 19 Mar 2013 16:44:52 +0000isaac2743 at http://loans.orgHow the Sequester Will Lead to a Rise in Payday Loanshttp://loans.org/payday/articles/sequester-will-lead-rise-borrowing

The dreaded Sequester is here.

Like a storm on the horizon slowly rolling towards America, it has finally arrived.

While the finger-pointing is in full swing in Washington D.C., the repercussions of the massive federal budget cuts are already being felt.

In fact, the Sequesters squeeze may end up leading to a boom in payday loan borrowing.

Lets take a brief and broad look at what the Sequester is before diving into how a massive budget cut would lead to a rise in payday lending.

Birth of Disaster The Sequester took effect on March 1, 2013, after a very heated blame game between the Obama Administration and Congress.

One could say the Sequester was conceived in 2011 as part of the Budget Control Act of 2011. The goal was to incentivize the Joint Select Committee on Deficit Reduction to reach a deal that would cut over a trillion dollars over one decade. Unfortunately, a deal was not reached thanks to one of democracys side effects of granting our government the right not to compromise.

The Sequester got lumped into the big fiscal cliff and was delayed until March.

Now, the Sequester itself is divided up into several types of cuts, with the largest being defense.

So there you have it, the horribly political story about the Sequesters messy birth.

But what does a defense budget cut have to do with payday loans? A great deal, to be honest.

The Sequester has cut military and defense spending. This means that vehicle and weapon purchases are in decline. Contractors and defense industry employees now have less income as a result. On top of that, military civilian employees, such as dining hall employees and trainers, are also feeling the pressure of reduced income due to closures.

The problem only begins there.

The Chain Reaction The suffering will primarily come from job losses, furloughs, and benefit reductions, Patrick Kelly, consultant at financial advisory group Impact Partnership, said to loans.org.

These employees live near military bases, where their skills and talents enhance the militarys capabilities, and in turn their disposable income is spent near where they live. Here is where the problem expands.

Local businesses, such as restaurants and retail stores, will experience a drop in business now that people affected by the Sequester will have lighter wallets and purses. In fact, hundreds of thousands will lose their jobs.

What will happen to the employees or these restaurants and retail stores? Their managers and employers will be forced to slash their wages and salaries. Now, facing their localized recessions, they will be forced to extensively budget their finances. Many though, will fail.

In failure, they will turn to credit cards, selling valuables, and borrowing payday loans to survive.

A Desperate Rush No doubt, at least a few of these desperate people will end up borrowing the wrong payday loan from the wrong payday loan lender. While some will be fortunate and borrow payday loans with protections and interest rate caps, those who borrow unregulated and unethically formed payday loans will be in for a rude awakening as they end up owing sizable amounts of money.

These people wont be the first or last to borrow payday loans. The chaotic time in the immediate aftermath of the Great Recession saw a boom in borrowing as newly unemployed people depleted their savings and credit. The unfortunate people affected by the Sequester can look forward to a similar fate; at least those that borrow from the wrong lender.

Any time an individual makes less income, whether directly or indirectly, it will almost always have a direct correlation to their credit score, said Kelly. Less income means more defaults on outstanding debt. And more defaults means lower credit scores.

Unfortunately, storefront lenders in cities and towns near military bases are in short supply. Sure, some exist past the boundaries mandated by the Military Lending Act, but the real danger may be online.

Payday loan websites are more difficult to regulate than storefront payday loan lenders. Its generally harder for the judicial system to handle a websites alleged misconduct than it is to do the same for a retail lending store.

While it is difficult to predict just how deep or shallow these hundreds of thousands affected by the Sequester will get themselves into debt, it is easy to see the difficult road ahead for them.

The partisan politics have raged for too long, said Kelly. Both sides of the isle need to come together and do whats best for this country, not just for their personal election campaigns.

Unfortunately, the public can only sit and wait to see if Congress and the Obama Administration will ensure that the difficult road is a short and brief journey.

Wed, 13 Mar 2013 23:24:58 +0000isaac2737 at http://loans.org5 Reasons to Use Payday Loans when Money is Tighthttp://loans.org/payday/articles/five-reasons-use-cash-advance

When peoples wallets are light and money is tight, a number of them turn to payday loans.

Its hard to imagine that before payday loans, the only option for cash-strapped individuals was to approach friends and family or take something valuable to a pawnshop. Borrowing a small amount of money from a bank would be helpful, but some banks can take weeks to process an application for a loan.

Since these options are tenuous at best, many people turn to payday loans.

The cash advancewith its one-time, flat fee (typically $15 per $100 borrowed)is often the most affordable option, said Jamie Fulmer, Senior Vice President of Public Affairs for Advance America, in an interview with loans.org.

Heres a list of five reasons why you should borrow a payday loan when money is tight.

Number 1: Convenience Payday loans take the cake when it comes to convenience. Most major cities in states where shortterm loans are legal have at least one or two payday lender stores. While certain states, counties, and cities have outright banned this industry, those locations currently remain in the minority.

Chances are there is a lender within driving distance of you.

More to the point, there is the wonderfully infinite world of online business. Payday loan websites are a dime a dozen. Youve probably seen commercials or online ads trying to get you to visit a payday loan companys website. Some even advertise a phone number and a means to borrow a payday loan by calling a representative.

Talk about the ultimate in convenience. You dont even need a computer or car to get a payday loan.

Just the cell phone in your pocket.

Fulmer said its precisely due to this flexibility and ease of access that cause his customers to enjoy the use of short-term loans.

But convenience alone isnt the only reason you should borrow a cash advance when money gets tight.

Number 2: Speed If you want a loan from a bank, chances are you are going to have to call the bank, speak with a representative, wait on hold as you get transferred to a loan officer, speak with that loan officer, schedule an appointment, and finally drive to meet with your new loan officer at the scheduled time.

Not exactly a quick process, especially if you need money immediately!

So how do payday loans differ? Well, compared to banks and credit unions, they might as well be moving at the speed of light.

Payday loan companies can approve you for financing within minutes. This is because they dont bother to run credit checks. Some dont even bother to run employment records. They simply want to verify you have income or a sufficient balance in a bank account to justify them loaning you money.

Its a simple process that leads to a faster result.

Number 3: Privacy Nobody wants to bother other people for money if they dont have to. Worse still, many people feel ashamed or weak if they suddenly find themselves in a desperate financial situation with little money available to them.

Instead of having to explain to family and friends why you have no money, you could simply borrow a payday loan.

Assuming you go to a payday lender store in order to borrow money, you will be treated as a customer and not someone begging for money. It will be a private matter that exists only between you and your lender.

Number 4: Bad Credit Not everyone has good credit. In fact, thanks to that wonderful recession, few people have good credit anymore. This is because most everyone had to dip into their savings, default on extraneous financial obligations, or tap into their credit lines in order to weather the worst months of the recession.

When you have to use up a lot of your credit, it is reflected in your credit score, which gets lowered accordingly. With so many people running around with bad credit, chances are they cant get a normal loanor even a credit cardfrom a bank or credit union. What are these people to do?

Payday financing companies dont bother to check credit scores. In fact, they assume their customers dont have good credit; so why bother checking?

However, not all payday loan companies use this to prey on customers with poor lending practices.

A complex framework of federal and state rules governs nearly every aspect of regulated lenders operations, from truth in advertising to disclosure to maximum loan amounts to collections

practices, said Fulmer.

This is music to the ears of bad credit consumers. They can go to payday financing companies, which may be the only lending source who will lend them money, and be greeted with open (yet safe) arms.

Number 5: The Last Resort Lets imagine a horrible situation; just for a second.

You have no money. Your family and friends refuse to lend you money. Your credit is so bad that it is in the double digits. You have an emergency that just cant wait and can only be solved with money.

Chances are, you wont have any luck getting a bank or credit union to give you money. So where do you turn now that you are wits end?

You do the only thing you can do: you get a payday loan.

With that money, you handle your emergency situation and take a step to regaining control of your life again.

Hopefully, you are never in a situation that forces you to borrow of a payday loan, but, if you do find yourself in such a predicament, its nice to know that there are trusted and legal lending sources out there. These five reasons can really help you understand when you should borrow a payday loan.

However, as a final piece of advice to leave you with: Remember, cash advances carry interest like any other type of loan and must be repaid on time, so dont borrow them hastily or without some careful forethought.

Tue, 12 Feb 2013 19:01:22 +0000isaac2694 at http://loans.orgThe Never-ending Payday Loan Divide Wages Onhttp://loans.org/payday/articles/never-ending-divide-wages-on

The war on payday lenders wages on.

Across the country, legislators and politicians fight to end payday loans once and for all. In addition, there are other voices emerging from those who believe in a right for financial choice and freedom.

But are their insights educated or simply biased?

Support in an Unlikely Realm Although there are few non-business advocates for payday loans, one collegiate professor does see a need for short-term lenders within the economy.

The article The Pitfalls of Regulating Consumer Credit defends the high-criticized payday loans because of their impact on unbanked citizens.

The publication, co-written by Todd Zywicki, Professor of Law at George Mason University School of Law, and Robert Sarvis, an MA Student in the Department of Economics at George Mason University, states that payday loansmay legitimately be the most attractive option, due to their convenience, reliability, and availability on short notice.

Zywicki and Sarvis commend the loans because of their ability to fill a void in the economy.

Payday loans therefore fill an important gap in the supply of financial services to the poor, according to the publication. Payday lending offices may provide the only source of short-term credit available to residents of neighborhoods lacking traditional bank branches.

The article states that due to poor previous credit decisions, some borrowers are unable to access any other form of legitimate credit. For borrowers that can access necessary cash with payday loans, it can be a relief.

As a result, these consumers often value the simplicity and pricing-transparency of alter-native credit productions, according to the publication.

Current Legislative Law But not everyone is as keen on having this sometimes-volatile financial option.

In a recent press release, U.S. Senator Richard Blumenthal (D-Conn) requested immediate action to stop or limit bank payday loans. In conjunction with four other U.S. Senators including Sherrod Brown, Richard Durbin, Charles Schumer, and Tom Udall, Blumenthal requested federal regulators to step in and halt predatory payday loans.

Currently, bank payday loans are illegal in 14 U.S. states.

Four of the countrys major banks have begun to offer loans with similar characteristics to non-bank payday loans. These banks include Regions Bank Ready Advance, Wells Fargo Direct Deposit Advance, Fifth Third Early Access, and US Bank Checking Account Advance.

According to Blumenthals release, the typical bank payday borrower will take out 16 payday loans throughout the year. Some borrowers take out as many as 20 to 30 loans in one year.

The potential need for multiple payday loans can spiral into debt due to the significant percentage charge for the short-term loans. For bank customers with direct deposit, banks will advance the customers pay for a fee, ranging between $7.50 and $10 for every $100 borrowed.

Sometimes it is not a matter of the end cost, but rather whether or not consumers know the cost before getting a payday loan.

In Blumenthals release, he writes that payday loans are products designed to trap low-income consumers in a cycle of debt.

But Zywicki and Sarvis question why they should be eradicated for those who properly use them.

The publication states that a consumers desire and need for credit should not be ignored since there are many consumers who use these methods properly.

Politicians and bureaucrats need to understand the important and legitimate [sic] roles various forms of consumers credit play in the financial lives of consumers, both poor and non-poor, and to acknowledge the appropriate [sic] role that fees, interest rates, and other terms of credit play in regulating its availability, the publication states.

Hurting or Helping the Underserved?

The tireless work by legislators to restrict bank payday lenders is questioned by Zywicki and Sarvis.

For some consumers, the outcome of legislators assistance is not as initially expected. The authors write that the actions by regulators are well-intentioned but misguided.

Legislators and regulators assume that restricting particular forms of credit will lead to fewer bad financial outcomes. But thiscan lead to worse, not better, outcomes, stated the publication.

According to the report, nine million households do not have a traditional bank account. Limiting the financial options for those consumers could have an impact on the economy.

If banks and lending institutions can no longer offer payday loans, they will simply move to another lending realm. Future revenue increases could be seen in ATM withdrawal fees and checking accounts. And as the cost of checking accounts increases, some families simply cannot afford to have an account any longer.

Well-meaning limitations on banks credit-financing fees can actually increase the number of unbanked households, the report said.

Questionable Source of Funding Kathleen Day, media relations at the Center for Responsible Lending, said the study by the Mercatus Center is what the payday lending industry wants.

They always are saying the same thing, Day told loans.org.

The Mercatus Center at George Mason University, the organization that financially supported part of Zywickis report, is a think tank affiliated with the Koch family, who owns the majority of Koch Industries, an oil, gas and chemical conglomerate.

Zywicki confirmed that he received support from the Mercatus Center, but is unsure of where the financing comes from. He said he is not involved in their fundraising.

And this is not the first time that Zywicki has fought against restricting the payday lending industry.

Day believes the current study by Zywicki and Sarvis lacks any real evidence. She said the threat of increasing underwriting and limiting credit does not make it scarcer, as shown through the Credit CARD Act of 2009. The Act put limitations on the credit card industry, but Day said that although industry professionals were worried about it limiting consumer credit, it didnt.

She said it made the rules more transparent.

The same fear is sweeping the payday lending industry: a fear that regulation will hurt consumers ability to access credit. And when payday lenders say that limiting payday loans will hurt consumers, Day has a rebuttal.

My simple question is: give us an example. And theres havent been any, she said.

Alternative Funding Options Day said consumers are better off using credit cards, even with interests of upwards of 20 to 30 percent.

She said the APR for a payday loan is typically close to 400 percent, and for a person in a financial bind, it leaves them without a way to pay for necessities like rent and food.

She said for a payday loan ranging between $300-350, the average borrower will repay back $800.

The majority of the repayment is for interest.

It is really a backbreaking thing, she said.

But more than the cost of interest rates, Day is more concerned about a lack of regulation and underwriting. She said its amazing that legislation has to be passed for situations where people cannot repay their debts.

Day referenced the mortgage crisis as an example of what could happen if the payday industry isnt regulated.

The lack of underwriting is really what caused the mortgage meltdown, she said.

Unlike current mortgage and auto loans laws, the payday industry does not ensure that a borrower can legitimately repay their loans before they are given.

But Zywicki said that lenders already have incentives to confirm that they are underwriting loans responsibly. He said that borrowers pose a financial risk to the lenders.

The interest rate is higher because the risk is higher, he told loans.org. The borrowers are inherently risky.

Zywicki said that some regulations improve consumer choices, such as the Truth in Lending Act, but not all regulation is positive.

Regulation always has unintended consequences, he said. We get in trouble when we replace consumers judgment about what products are best for themConsumers are aware of which option is best for them at any given time.

He continued stating that the reason that consumers use payday loans is due to a lack of options, not because they are unaware of the cost. Zywicki said that consumers turn to payday loans because it is the best option that they have at any given time, and without them, they are forced to turn to loans sharks and pawn shops.

For some payday users, they have nowhere else to turn after a failure to gain approval on credit cards, or after maxing out their maximum balances.

But even though the APR for payday loans reaches into three digits, Zywicki does not think this option should be taken away. He said that evidence is overwhelming that consumers know the actual cost of a payday loan.

Taking away choices from people who already have limited choices is not going to make them better off, he said. You cant wish away the need of consumers for credit.

Zywicki told loans.org that he has not personally taken out a payday loan.

Who Controls Regulation?

Part of the fight between supporters and enemies of payday loans deals with whose right it is to regulate the industry.

According to Zywicki, the payday loan industry has enough credit reporting systems in place to track current and potential customers. He said that any formal regulations on payday loans should be up to the industry.

He continued stating that any further credit checks would make the products less effective and more expensive for the consumers that rely on them.

Consumer credit provides a very, very important benefit to consumers, small businesses and the economy, he said. We need to be very careful in regulating in such a manner.

Day agrees with Zywicki in the importance of credit, but disagrees that regulation will hurt it.

Credit is credit. It can be good or bad. It is essential to a functioning economy, she said.

Day said she teaches entire classes about credit, so summing its worth in a simple sentence is difficult, but she does believe that unregulated credit can have a hugely negative effect on consumers.

Credit done without underwriting, as we have seen [in the mortgage industry] can cause great harm to the economy, she said.

Can the Sides Ever Agree?

In the end, both sides fight for their version of logic.

Defenders of payday loans say it is illogical to steal away citizens right for a need or credit.

We need to be careful about taking away products because we dont like the choices that consumers make, Zywicki said.

Others realize that credit is not a right, but rather a useful tool for those strong enough to handle the responsibility.

We have evidence that making a loan to someone who is in financial difficulty, in terms they cant afford to repay, makes no sense, Day said.

Thu, 24 Jan 2013 20:29:30 +0000rebekah2655 at http://loans.orgIn the Trenches of the Payday Loan Warhttp://loans.org/payday/articles/in-trenches-lending-war

Pro-regulatory and pro-lender factions in the payday loan war continue to duke-it-out across the country. As one county gets new zoning laws or one payday loan lender backs a victorious political candidate, it is easy to forget that this war is a two-sided argument since news stories tend to be so one-sided. The media almost always covers tragic stories of borrowers who end up in massive debt traps rather than telling the story through an unbiased lens. While shedding light on payday loan victims isnt inherently unbiased, refusing to cover the topic from the other sides point-of-view is.

Gaining the perspective of the lenders in this billion dollar war can show that payday lending has merits of its own and that victories against the industry may be hollow at best.

Battlefronts Reexamined Despite the success of certain cities, counties, and states in banning payday lending, the payday lending industry is not fazed by what many consumer advocacy groups consider to be massive victories.

There has been a trend of municipalities, cities and towns trying to regulate the alternative financial services industry by way of zoning. There have been some cases that have been published of late where these attempts were found to be in violation of the states own laws. When municipalities try to regulate a legal industry out of business, it often does not work out as planned, said Cindy Vega from Financial Service Centers of America (FiSCA) in an interview with loans.org.

Vega highlighted how in Long Island, NY, a town tried to zone several financial service centers out of the citys best areas. However, a lawsuit filed by the targeted businesses managed to make its way to the states Supreme Court. The city was defeated since state law superseded local laws.

As gleeful as pro-regulatory factions may be in having entire states ban payday loan lending, lenders themselves claim to be perfectly comfortable operating in a regulated environment. Even if business is banned in one state, there are still a handful of others with open arms.

Jamie Fulmer, Senior Vice President of Public Affairs at Advance America, explained how payday loan companies not only adapt to regulation, but sometimes welcome it.

Advance America has always operated in a regulated environment at state and federal levels. Each of our locations in 29 states operates in a very specific regulatory environment. There have always been a number of federal regulations at the federal level. We are very comfortable in a regulated environment. A balanced regulatory approach is one thats good for consumers because it preserves their access to credit while offering sensible protections, Fulmer said in an interview with loans.org.

Lawful in the Lawless Internet While regulations at the city, county, and state level are easy to police, in the online world they are far from manageable. In fact, foreign lenders have even taken to going online to set up business operations that do not bar residents of certain states from applying. Fortunately, not all lenders are so quick to disregard the law online.

All online products are done so in compliance with state laws. Regulated payday lending products taken away from consumers lead to offshore illegal internet lending. Consumers pay more for unregulated online payday loans since there are no rules online. Consumers cant seek remedy from state regulators if they havent been treated fairly once they borrow an illegal online payday loan, said Fulmer.

Interestingly enough, even if a state bans payday lending, some financing companies may still operate in that state but only by offering non-payday loan products.

FiSCA members are multi-line providers. They offer a wide variety of financial products and services.

Check cashing, bill payment, prepaid debit card sales. FiSCA members operate throughout the country. Not all of them offer small-dollar loans. They operate under state laws and regulations, said Vega from FiSCA. Everyone Plays Ball News stories often tout that payday lenders throw money at politicians in order to get their own agenda pushed forward in legislation. However, both industry representatives and lenders are quick to point out that they are merely participating in the democratic process much the same way all other citizens and industries do.

FiSCAs concerns and issues are bipartisan. FiSCAs goal is to educate lawmakers on both sides of the aisle about how laws and regulation could impact their constituents. Any campaign contributions made by, FiSCA are made in accordance with the law, and support elected officials who understand the critical role our industry plays in the daily lives of millions of consumers said Vega.

Likewise, Advance America has also eagerly celebrated the practice of supporting political candidates.

Advance America is no different than any other company. We participate in the political process just like anyone else. We think it is important we have the ability to express our perspectives and concerns, said Fulmer.

This very same participation in the political process draws criticism that, much like Big Tobacco or Big Oil, the payday loan industry lines the pockets of politicians to get what it wants.

However, the industry remains defiant against these allegations and other statements by consumer advocacy groups that they are little more than loan sharks offering products with usurious interest rates.

Consumer protection is very important to FiSCA and its members. Equally important is a true understanding of loan products and how they work. If you look into the research, peoples ability to pay and repay loans is dictated by their financial situation and not the interest they are being charged. A lot of arguments about interest rates and rollovers is really moot, said Vega.

There is a lot of misinformation about loans and how they work she continued.

The research cited by Vega was a study performed by Arkansas Tech University and the Cypress Research Group. It found that, even when given interest-free payday loans, some borrowers, through their inability to manage money, would fail to repay the amount. In effect, the interest rate had nothing to do with whether or not a borrower repaid the payday loan. It seems some people simply do not have enough income to cover their expenses.

Consumer groups may not like us but our customers have a very high opinion of our products.

Internal studies show extremely low rates of complaints. Theres an unfortunate disconnect. Our customers would benefit most in having a discussion about how we can all work together to find ways to best serve the needs of consumers. Simply throwing around empty rhetoric is not the best way to have that discussion, said Fulmer.

Paper-thin Advantages Pro-regulatory groups have long sought to deal a blow to tribal-affiliated payday loan lenders.

Thanks to the level of immunity that tribal-affiliated lenders enjoy, their operations are able to skirt the law in many situations. While some lenders are quick to jump in bed with Native American tribes, not all companies take advantage of this unethical practice.

FiSCA members are not affiliated with tribal lending operations, said Vega. FiSCA members are required to operate within state and federal regulations. That makes them distinct and separate from tribal lenders. Tribal lenders claim that tribal laws supersede government regulation.

Legal immunity or not, customers still face risks when borrowing money online and offline from either tribal or non-tribal affiliated lenders.

I would say that consumers may have more protections when they use lenders that are following state and local regulations. Look at consumer complaints and you will see that the number of complaints per number of loans made is minute which points to the fact that consumers appreciate this much needed service. The rate of complaints against tribal lenders is significantly higher, said Vega.

Advance America, on the other hand, simply shrugs off tribal-affiliated companies as just another rival in a broad market.

We compete with a wide array of lenders, whether they are depository institutions like Bank of America, or tribal organizations or those partnering with offshore entities. We compete in the marketplace broadly. We feel comfortable in a marketplace that is regulated at a state level and also a federal. We believe we compete very favorably with all rivals in a way that provides service to our customers, said Fulmer.

While most payday lending companies operate within the confines of state and federal regulation, their tribal-affiliated peers may continue to spoil the industrys reputation if they continue to avoid such regulation.

If these bad apples continue to increase, reports of governments increasing regulation against lendersor at least attempting towill also increase. Both the pro-regulatory and pro-lender sides of the payday loan war can at least agree that it is of great comfort that law-abiding companies such as Advance America and trade groups like FiSCA advocate for competition within the framework of the law. Lawless online lenders (and even tribal-affiliated ones) should bear the brunt of consumer advocates focus as the billion dollar payday loan industry continues to expand into the new 2013 year.

Wed, 05 Dec 2012 21:16:08 +0000isaac2570 at http://loans.orgWhy Banks Are Entering Into Payday Lendinghttp://loans.org/payday/articles/why-banks-are-short-term-lending

The quintessential and often stigmatized payday loan can be found in inner city retail lending stores surrounded by pawnshops, high crime areas, and slow police response times. At least, thats the average idea that comes to mind when one thinks of cash advances. Unfortunately, most questions about payday loans pertain to financing from retail lenders and not big banks. However, this interpretation needs a massive overhaul now that large financial institutions have entered the fray.

Big banks, like financial juggernaut Wells Fargo, have entered the payday lending industry hoping to reap in the profits that many lenders have enjoyed in recent years. While these banks can call their instant loan products advance this or advance that, a payday loan by whatever moniker still functions the same.

Banks like Regions Financial and US Bancorp are well known and could even be considered household names. They have the financial resources and market share to dominate the traditional banking industry. This begs the question of why they would want to expand into payday lending and rub shoulders with tribal-based instant lenders, online cash advance sites, and inner-city payday lendershardly their equals.

The answer lies with the recent actions of the too-big-to-fails most prominent nemesis: the federal government.

Cause and Effect In 2010, the Federal Reserve ruled to limit debit-card swiping fees. Additionally the Fed also placed tougher rules on overdraft fees. In short, banks lost a sizable amount of revenue. To compensate, entering the payday loan industrywhich is boomingseemed like a logical decision in pursuit of profit.

For their part, the big banks seem to at least be avoiding more overt usurious levels of interest rates on their new payday loan products. Wells Fargo is offering its cash advances worth $500 and charges less than ten dollars for every $100 that is borrowed. Unlike most payday lenders, the bank cuts off customers that default over six monthsmeaning that there is a safeguard against rollovers.

Similarly, U.S. Bancorp offers their Checking Account Advances in cash amounts up to $500 for a 35 day period charging $2 per every $20 borrowed. Banks gain the added benefit of being able to automatically deduct payments from the checking accounts of their advance borrowers.

Fortunatelyand for the time beingnot all of the big banks have thrown their weight behind payday loans under rebranded names. Citigroup and JPMorgan Chase seem content not to enter the payday lending industry and perhaps for good reason. The cash advance industry has been increasingly targeted by attacks from state and local governments in the form of regulation. It isnt too farfetched to imagine that a time may come when payday lending can only be found online. For the time being though, they are readily and legally found online and offline in most states. However, Citigroup and JPMorgan Chase may simply be acting wisely by not entering into what could be a shrinking market.

Time will tell just how well the big banks fare in the shifting payday lending industry and how regulators face off against these new opponents.

Wed, 07 Nov 2012 00:20:10 +0000isaac2480 at http://loans.orgDont Get a Payday Loan This Christmashttp://loans.org/payday/articles/dont-get-cash-advance-christmas

Once again, Christmas will be here before anyone realizes it. Time flies and the holiday season will soon arrive. While everyone loves a good holiday, it is sobering to remember that due to ongoing economic difficulties, not everyone can spend as much as they would like to during what should be times of joy.

Sadly, the recession has made it all too common for families to cut back on the presents they purchase for others. Similarly, the iconic American Christmas meal with turkey, stuffing, mashed potatoes and a host of other delectable sides can equate to a lot of money. In such circumstances it is only natural for families and breadwinners to want to borrow money so that they will be able to give their loved ones special holiday memories. While some borrowers are wise enough to seek out financing with reasonable interest rates, not all borrowers are so well-informed (or well-equipped), and may end up making the costly mistake of seeking short-term financing.

News stories about payday loans are rife with reports of borrowers being swindled by unscrupulous lenders or misunderstanding the debt they agreed to. One such borrower was computer assembly technician Anita Monti from Raleigh, North Carolina. As a grandmother, Anita loved her grandchildren and would no doubt do anything to see them happy. In 2011, as Christmas approached, she desired some extra money to help pay for gifts for her grandchildren. After overhearing a co-worker mention payday loans, she eagerly applied for one and was approved.

Unfortunately, she was quickly saddled by the debt and unable to repay it.

I felt like I was in a stranglehold each payday. After awhile, I thought, Im never going to get off this merry-go-round. During this time, I got a promotion and a raise, but I never saw any of that money.

It all went to pay their fees. I got behind on rent and had to pay late fees, said Anita in an interview with Responsible Lending.

Things eventually got so bad for Anita that she was forced to seek help from her church in order to pay her rent. She later worked with a credit counselor in order to work out a payment plan with her lender. In the end, she paid $1780 for a $700 payday loana massively profitable arrangement for the lender, and a massively costly blunder on her part.

Anita was no doubt just one of many payday loan borrowers who sought some help with Christmas expenses in 2011. Unfortunately, since there has been minimal if any improvement in the world economy, we will likely see a repeat of the same kind of borrowing practices come this Christmas.

In the UK, where payday lending and a slow economy are a near-mirror image of the US, the Money Advice Trust, operators of the National Debtline, have seen a 268 percent rise in the number of calls about payday loans in the weeks approaching Christmas. This helpline claims to have received a call from a struggling borrower every nine minutes, according to the Mirror.

In many cases, people are already in financial difficulties and they are using payday loans to pay

basic bills and pay of other debts. With budgets stretched to breaking point and the extra pressure of Christmas approaching, payday loans can seem temptingquick and easy to apply for, often with the bare minimum checks, and the promise of money in your account within minutes. But these loans dont come cheap. They start with whopping annual percentage rates, typically of over 4,000 percent, and if you cant pay off the loan in time you get hit with hefty extra charges, said Gillian Guy, chief executive of Citizens Advice.

Consumers short on cash this holiday season must remember that while payday loans are certainly the easiest type of financing to get, they are not the only form available. Applying for a personal loan may be a far wiser move since this form of financing carries much more reasonable interest rates and repayment timelines. Even though another article has discussed that personal loans canand maybe even shouldbe borrowed during the budget-tightening holiday season, it must be understood that payday loans are as different from personal loans as night and day.

In that borrowers obtain a personal or payday loan for their holiday purchases, they should remember that it must be repaid in a timely fashion. Borrowers should be realistic about what they can afford to spend this holiday season. Budgeting and being more frugal can help free up spending money for this special time of the year. At the end of the day, it is far better to have only purchased a few gifts and less food for a Christmas dinner than to find oneself unable to pay their rent or mortgage on a home.

Fri, 26 Oct 2012 20:27:57 +0000isaac2430 at http://loans.orgMerchant Cash Advance Loans Rescue e-tailershttp://loans.org/payday/articles/merchant-cash-advance-rescue-e-tailers

While consumer advocates have achieved some victories in court and on the streets regarding the ongoing payday loan wars, certain cash advance lenders are continuing to expand their foothold online. These lenders offer a specific type of financing called a merchant cash advance loan. Online retailers, or e-tailers, have found merchant cash advance loans to be a source of funding well suited to their online nature.

Danni Ackerman, an eBay store owner, found that getting a business loan from her bank was all but impossible, as told in a story by the Las Vegas Review-Journal. In order to sustain her business operations she simply couldnt afford to wait for the banks lengthy approval process. Ackerman rode her entrepreneurial spirit and decided to seek a lender who would actually provide what she needed.

Her search found Kabbage Inc., an online merchant cash advance lender. In a hybrid mix of payday lending and traditional business lending, Kabbage reviews the transaction data, analytics, shipping data, and payment records of online businesses in order to determine whether they are viable borrowers. Similar to payday lenders, a merchant cash advance lender looks beyond credit scores.

That practice has been a boon to Ackerman.

Im on my eighth advance. Ive used them to purchase merchandise and upgrade equipment. Its been a really good deal for me, said Ackerman.

Merchant cash advance loans are different from traditional cash advances because they are exclusively available and marketed towards online businesspersons, such as Ackerman. They also come with much lower annual percentage rates than your typical payday loan.

The cash advance loans that Ackerman borrowed from Kabbage have ranged from $500 to $2,000, with 2 to 7 percent interest rates charged over a six-month period.

According to research company EMarketer, e-commerce businesseslike Ackermans eBay operationare expected to grow to $224.2 billion this year. This is an increase from $194.3 billion last year. Such a massive increase in online businesses will no doubt provide a pool of potential customers for the merchant cash advance loan industry.

Merchant cash advance lenders have mirrored the rapid speed of online payday loan lenders.

Ackerman claims that she knows whether she was approved or not within a matter of minutes to an hour.

If I dont have the cash reserves to buy the merchandise, Ill go to Kabbage. Its not a long-term loan.

Its easier than dealing with a bank, and it takes less time for (the money) to be deposited in my PayPal account, she said.

Ironically, large and traditional lenders often refuse to offer financing to the booming e-commerce industry sinceunlike physical storesonline retailers usually have little to no collateral to secure a lenders money.

Adding weight to the expansion of merchant cash advance loans in the online lending market is the addition of former Yahoo and PayPal executive Scott Thompson to the Kabbage board of directors.

Kabbage is rapidly reshaping the small business financing space in the same way that PayPal reshaped the payments space over the last decade. I enjoy working with and believe I can have the most impact on companies that are re-inventing the ways financial services are delivered to consumers and small businesses, said Thompson in a press release.

Kabbage has aided Ackerman andthus farnot proven to be a toxic lender. This shows that internet and market innovation can result in useful and healthy short-term lending practices. More specifically merchant cash advance loans can further aid the economys recoveryboth online and offlineby offering credit to borrowers who are unable to find recourse through traditional lenders. So long as conventional lenders view online businesses with the same lenses they view physical businesses, conventional lending will not contribute to economic recovery and growth. Merchant lenders like Kabbage and its rivals are only all too happy to see conventional lenders sit on the sidelines as they innovatively rake in profits and redefine merchant cash advance lending.

Mon, 01 Oct 2012 21:44:00 +0000isaac2364 at http://loans.orgHow Payday Loan Bans Hurt Consumershttp://loans.org/payday/articles/how-lending-bans-hurt-consumers

The payday loan industry has seen better days. Just a few years ago, as the economy worsened, the cash advance loan business soared since financially desperate Americans turned to cash advances in order to make ends meet. But with more and more Americans taking out high interest payday loans, it was only a matter of time before some unscrupulous and unethical lenders appeared on the scene to take advantage of borrowers.

Previously, payday loans could be applied for by using fax machines. But as technology advanced, fax machines fell by the wayside and no fax payday loans became the norm. Now, just commonly called payday loans, this form of financing is a burgeoning business.

Like all industries, the cash advance loan industry has its share of bad apples. Sadly, these bad apples have spoiled the bunchat least in the eyes of some regulators.

The growth of the payday lending industry spread both offline and online as more retail lenders opened up in low-income neighborhoods while online cash advance websites multiplied drastically.

Realizing the need to haltor at least slowthe proliferation of this industry, regulators developed laws that limited interest rates, loan amounts, fees, and even retail locations. Some regulators even went to extremes and outright banned the industry from operating within their states or communities.

Unfortunately, banning an industry with such an apparently gargantuan demand may end up hurting the very borrowers that the regulation sought to protect.

The Cure Is Worse Than the Disease While regulators no doubt have borrowers best interests in mind, that does not mean those lawmakers are incapable of making poor decisions. By banning cash advance loans in several states, regulators may be doing more harm than good.

Cash advance borrowers are generally low-income earners that are not financially stable. These people turn to cash advances because they often do not have the money necessary to pay for rent, utilities or groceries. Few people would borrow payday loans simply to spend the money on recreational or disposable purchases since these loans carry such high interest rates.

Since cash advance lenders dont take credit scores into account when lending money, payday loans carry high interest rates to protect lenders from risky loans made to bad credit borrowers. But these products are one of the fewif onlyoptions for bad credit borrowers to obtain money.

Banning payday loans robs borrowers who demand this product of financing options, and it essentially forces these borrowers to settle for more harmful alternatives.

Bans Bruise Borrowers

Once payday loans are gone the borrowers would do what they must in order to survive.

By spending sorely-needed savings and depleting checking accounts, would-be borrowers risk bouncing checks. Bounced checks result in large fees, which, in itself, is a roundabout debt-trap.

This could potentially leave some would-be borrowers vulnerable to eviction, foreclosure, or even hunger. People who cannot afford utilities face them being shut off. Subsequently, there can be reconnection fees, which would further tax already ailing accounts.

Some cash advance loan borrowers have credit cards. These would-be borrowers could use their credit cards to withdraw cash. But doing so would prove costly since using a credit card to withdraw cash often results in expensive fees coupled with high interest rates.

Without short-term lending, would-be borrowers might be forced to liquidate valuables. Selling or pawning assets to pawnshops in order to scrounge up money wouldnt be outside the realm of possibility.

Finally, desperate or uninformed people sometimes turn to loan sharks. Needless to say, this is a dangerous prospect since many loan sharks are criminals that only lend money at usurious rates.

While a payday loan ban may financially bruise borrowers, loan sharks can literally bruise borrowers.

Online Escape Despite regulators best efforts, the online payday lending landscape is far from controlled. Online, borrowers around the country can find cash advance loans readily available for their use. While payday loans made online may be illegal in states where retail payday loans are already banned, enforcement is uncommon.

This lack of enforcement has been a leading cause of borrower abuse. The online landscape offers an escape route for borrowers who feel trapped by cash advance loan bans.

Regulators must realize that borrowers will pursue payday loans online if they are banned offline. In this war of regulation, law makers may win the storefront battle, but theyll surely lose the online war.

Fri, 07 Sep 2012 19:52:04 +0000isaac2312 at http://loans.orgThe Payday Loan Zoning Warhttp://loans.org/payday/articles/the-lending-zoning-war

A war is being waged across the country. Not a war of bullets and violence, but rather a war of laws and money. This is a war over payday loans.

Payday loansor cash advance loansare a type of short-term financing that carry high interest rates

since they are typically one of the few forms of financing available to people with bad credit scores.

Like most other industries, cash advance lending maintains a growing online presenceyet such was not always the case.

Once upon a time, payday loans could only be found in retail lending stores. Perhaps due to their catering to customers with poor or completely non-existent credit histories, these retail cash advance companies became notorious for setting up shop in low-income areas. This practice has arguably led to short-term lenders as being seen as proverbial eye-sores, if not symptoms of urban blight.

Negative stigma or not, the cash advance industry has grown both offline and online. While city governments may have few powers online, offline in the physical world they can prove to be a businesss best friend or worst enemy. Unfortunately for the payday loan industry, a growing number of city governments have decided to be the worst enemies of retail cash advance stores by using zoning laws to limit their locations.

By using zoning laws as veritable weapons in the war against the payday loan industry, several cities across the country have made it clear they are not accepting of cash advance businesses.

Unfortunately, these cities may end up pushing lenders into the online market where businessand unethical lending practicescan be conducted far from the prying eyes of city officials. Despite this potential problem, battlefields have already sprouted across several states.

The Battlefields In Texas alone, the city governments of Dallas, Austin, and San Antonioto name a fewrecently passed ordinances that limited the expansion of cash advance businesses within their borders. Critics of the payday loan industry applauded these measures by claiming that the short-term and high interest of cash advances force city residents into cycles of debt.

These Texas cities arent alone in their fight. In Iowa City, officials succeeded in forcing payday loan companies from operating within 1,000 feet of schools, parks, and churches. Nearby Iowan cities, such as Des Moines and Clive, also regulate cash advance stores.

This war is not just being waged in the economically modest Midwest. The wealthy and prosperous Bay Area of Northern California has seemingly had enough of the payday loan industry. In an interview with Mercury News San Jose City Supervisor Dave Cortese said, Were just zoning them right out of existence.

Despite the best intentions of municipal leaders and consumer advocates, zoning out the cash advance industry is a stop-gap measure at best that may end up further pushing payday operations into the unregulated domain of the internet.

The Online Gold Mine The practice of zoning away payday loan stores is little more than a short-sighted solution for a local problem that fails to address a massive demand. Borrowers show their demand for cash advances by searching for payday loan quotes, visiting cash advance retail stores, and, more importantly, by actually spending money for forwards on their paychecks. If local governments fail to meet that demand, internet lenders will be more than happy to meet that demand onlinewhich is far from the policing eyes and powers of municipal, state, and federal authorities.

Online, regulators have limited powers and limited reaction times. Illegal and uncertified lenders can create websites in minutes. Even if certain states restrict cash advances to approved lenders,

there isnt a regulator present in every home, making sure computer-users are only submitting personal information to certified online cash advance businesses.

The online lending industry is already burgeoning and will only continue to increase thanks to the minor gains that some cities and towns have made. By pushing cash advance lenders off the streets, cities have only succeeded in forcing retail lending storeowners to see that once relocated onlinewhere they would have access to potentially billions of eyesthey can truly make a killing.

As city officials and consumer advocates pat each other on the back, the online payday loan industry may end up having the last laugh as some of the residents of Iowa City, Dallas, and San Jose go online to borrow payday loans.

Tue, 04 Sep 2012 18:24:50 +0000isaac2303 at http://loans.orgWhy Online Payday Loans Need Regulationhttp://loans.org/payday/articles/why-online-lending-needs-regulation

According to the Pew Charitable Trusts the payday lending industry takes in at least $7.4 billion in revenue each year. Over 12 million borrowers take out payday loans annually.

Online payday loans are becoming the dominant form of payday lending. While physical retail lending stores are readily available in many cities and towns, they lack the national and global level of accessibility that online payday lending offers.

Unsurprisingly, the levels of regulation that apply to retail and online businesses are not the same.

Retail payday lending stores, being tangible businesses, are fairly easy to police and regulate. In contrast to this, online payday loan companies, who often cross state and international borders, are far more difficult to regulate. This allows some online lenders to abuse and take advantage of borrowers through unethical practices.

The publics lack of financial education only helps enable some of these unscrupulous lenders to take advantage of unsuspecting borrowers.

The average borrower may not be up to date on current payday loan industry developments. Even though consumers can inform themselves by seeking online payday loan quotes and information, current consumer awareness is lacking since lender websites do not always reveal the full cost of online payday loans.

Double Standards Numerous states, counties, cities, and even towns have passed regulation that restricts retail payday lending stores. Some of this regulation governs permissible interest levels and required disclosures, while other laws restrict location and zoning requirements. At a federal level, the military and the federal government have even regulated the zoning of payday lenders near bases.

However, online lenders, who often require private bank account information from applicants, are largely unregulated. Nothing prevents borrowers, seduced with promises of inexpensive loans, from entering their banking information into websites. This has lead to ongoing problems caused by the online payday loan industry.

Online Woes Similar to retail loans, online payday loans carry high interest rates. Online payday loans can cost up to $30 per $100 borrowed which equates to an annual interest rate (APR) of 650 percent.

Needless to say, these online cash advances can be a costly problem for borrowers.

Exacerbating the situation is the current slow economy which is still reeling from the effects of the recession. Many people are under financial duress and struggle to survive due to low income jobs, unemployment, and wiped out savings or investments.

On top of these economic woes, life often throws unforeseen circumstances at the most inopportune times. Unexpected and emergency expenses, such as necessary car repairs or medical bills after an injury, are all too common in life. In these trying situations, many borrowers are pressed to consider borrowing a loan. Unfortunately, online payday loansoften carrying triple-digit interest ratescan turn an already bad situation into a worse one.

Lenders do not always inform borrowers about their products sky-high interest rates. While retail lenders may be forced to do so through local legislation, the situation online is far different. The operational differences of online lenders compared to their retail counterparts allow opportunities for abuse.

Retail lending stores are under the oversight of local governments, such as city governments and Chambers of Commerce, whereas online operations are far more elusive. According to a report by the California Department of Corporations, online lenders often fail to notify prospective borrowers of the APRs that accompany their online payday loans. Federal and state law requires the disclosure of APRs since those numbers are viewed as a measurement of the true cost of many forms of financing, including online payday lending.

In addition to lack of disclosures, online payday loan lenders, by the very nature of online business operations, require applicant borrowers to submit personal financial data, such as bank account data. According to regulators, some unscrupulous lenders deposit funds into borrower accounts before the borrowers have even agreed to the loans and completed the borrowing process. Lenders then withdraw money from bank accounts for repayment, sometimes without notification to the borrower.

Naturally, this unethical practice has angered many borrowers, some of whom have closed bank accounts in an attempt to safeguard their money. Aggressive lenders have been known to pursue these borrowers in small-claims court.

Unfortunately, stealing money isnt the only crime that some online lenders commit.

Equally worrisome for borrowers is the practice of certain online lenders not providing sufficient contact information. Even more heinous is the practice of certain lenders operating out of state and overseas in efforts to avoid licensing and government-mandated regulation. While banks and credit unions must obtain licensing and must follow stringent regulations in order to operate, unlicensed lenders are effectively illegal operations that leave little recourse for aggrieved borrowers.

Clearly online payday loan lending requires increased measures of regulatory controls.

Regulatory Protections Many activists propose to protect borrowers by limiting online payday loan amounts and lifetimes.

This would effectively curtail the amount of debt that borrowers are responsible for as well as the amount of time that debt accrues.

While consumer protection advocates call for interest rate and online payday loan lifetime caps, these protections are difficult to enforce against online lenders who already flagrantly operate without certification and licenses. Furthermore, it is almost dismissive to simply tell borrowers to try other methods of obtaining money, such as borrowing from friends or family, when there is clearly a huge demand for payday loans.

Payday lending is not facing a national ban and may never face such legislation since the industry devotes such massive resources to lobbying efforts. A far more appropriate approach would be the implementation of regulation that protects borrowers who decide to use online payday loans.

By instilling regulation that would require banks to approve third-party access to bank accounts, we could prevent unlicensed lenders from making illegal withdrawals.

Specific online payday loan certification that covers operations nationwide may be another prudent form of regulation. Visible certification on websites can inform both prospective borrowers and banks that an online lender is reputable, upstanding, and worthy of access to borrowers bank accounts.

These proposed regulatory measures will involve the banking industry and may be opposed by various special interest groups. However, regulatory efforts involving two opposing factions are rarely universally welcomed with open arms. Developing and implementing regulation is a difficult endeavor, but just because something is difficult does not mean it should be avoided, nor does it mean that the borrowers of payday loans should be left to the mercy of unregulated internet business operations.

Fri, 31 Aug 2012 18:00:29 +0000isaac2300 at http://loans.orgThe Different Lenders of No Credit Payday Loanshttp://loans.org/payday/articles/different-lenders-industry

To say that times have recently been tough is an understatement. Many Americans, including college graduates, have lost their jobs or been forced to settle for jobs with low pay. In order to purchase necessities or pay for emergency expenses, many people have borrowed no credit payday loans.

As their name suggests, no credit payday loans are cash advances that require no credit checks and have no credit score requirements. While this can seem attractive to people with horrible credit,

there is a price to be paid. No credit payday loans carry high interest in order to cover the risk of lending to borrowers who have horrible credit histories.

Despite charging high interest on loans, the cash advance lending industry continues to make massive profits and has actually grown in size.

Payday lending has proven to be a profitable business with enterprising presences both online and in physical store locations. A closer look at the myriad of lenders shows that cash advance lending holds few signs of shrinking.

Online Lenders Online payday lending is gargantuan in scale. Various lenders offer their services online. However, like most things online, there is little to no oversight of online cash advances. The massive market exposure offered by the internet has given rise to lenders crossing state lines, and even international waters, despite some state governments banning these products.

Many online lenders simply lend to whoever they can, regardless of state laws that prohibit cash advance loan operations from lending within their borders.

Brick and Mortar Lenders Payday loan retail locations, or brick and mortar stores, are often offices and buildings where prospective borrowers can physically visit to borrow no credit payday loans.

Brick and mortar lenders are sometimes franchises or chain stores, but some are stand-alone establishments.

Commonly stigmatized as being seen only in low-income areas, brick and mortar lenders typically face the brunt of regulation, which includes zoning laws and interest rate caps. In contrast to this, their online counterparts can generally skirt regulation.

Companies and Corporations Brick and mortar lenders may be independent businesses but there are far larger lenders at work in the industry.

Titans like Cash American International, Check into Cash, Advance America, and many others are publically traded companies that generate millions in annual revenue. In addition to operating thousands of retail no credit payday lending locations across the country, these corporate giants also have presences online.

In effect, these massive companies are the Walmarts, the McDonalds, and the Coca Colas of no credit payday lending.

Being companies of such sizes, the lobbying power of these corporations is nothing to scoff at.

Tribes Rush In The rush to lend through online means has not been isolated to companies and corporations. Indian tribes have also noticed the veritable gold rush to lend money at high interest rates.

Taking advantage of their sovereign legal status, Indian tribes have begun operating no credit payday loan companies within their reservation borders, allowing them to avoid laws in states that

regulate the industry. These same regulations often hinder or outright ban the operations of nontribal cash advance loan companies.

Tribes, immune to prohibitive laws, have grown so profitable that they have attracted the attention of many lenders who wish to partner with them. These partners include lenders who have been chased out of other states by restrictive regulation.

Cash advance lending has only been rising, which is possibly a sign of economic distress despite the governments claims of job growth. Lenders who are innovative and hungry for profit will continue to prosper and grow. As lenders evolve to survive in the industry, borrowers may very well see appdriven cash advance loans and text-based cash advance lending in the coming years.

Tue, 21 Aug 2012 19:19:46 +0000isaac2286 at http://loans.orgOpposition to Instant Loan Lenders Will Risehttp://loans.org/payday/articles/opposition-instant-lenders-will-rise

A mix of desperation, uninformed borrowers, and predatory lenders are to blame for the ongoing trend of rising instant loan opposition. Across the country many states have been spurred to limit or outright ban the lending of instant loans. These states have been pushed towards these measures by various special interest groups that claim to represent the common borrower and consumer.

It is common knowledge that America is still struggling through the recession. Now that almost everyone has a lighter walletor an empty walletliving hand-to-mouth isnt so uncommon. Instant loans have steadily risen to be something more and more Americans borrow.

Lost jobs from the recession mean lost income. A chain reaction leading to repossessed cars, foreclosed homes, and an early end to dreams of an education and retirement can all be the result of unemployment. To survive, many Americans borrow payday loans, but most see them as a temporaryalbeit necessarymeasure. Payday lenders have spread to near ubiquitous levels in cities across America.

Predators and Protection Unfortunately for many borrowers, not all payday lenders are equal. Desperate people are easily targeted by unscrupulous instant loan lenders.

Famous race car driver Scott Tucker, of Johnson County Missouri, along with his associates, was accused by the Federal Trade Commission of deceiving and entrapping instant loan borrowers.

Tucker, working in collusion with Indian tribes, was able to obtain a measure of immunity by cleverly becoming an employee of the tribes payday operations.

Online lenders, who often operate across state lines, are also known to abuse borrowers. Many of these lenders have even used harassment via phone in order to get their payments from defaulted

borrowers.

To counter payday loans excessive interest, roll over fees, and borrower vulnerability, many states and even our military have taken measures against instant loan lenders.

Some states, such as Arkansas and Arizona, outright prohibit payday loans. Other states, such as Delaware and Alabama capped loans at $500.

However, some states, like Maine, still have no limits on instant loans or accompanying financing fees.

The military passed the Military Lending Act in order to protect service members, who often reside on bases surrounded by payday lending establishments, from usurious and predatory lending practices. Since members of the military are typically young, low-income earners, and uneducated in regards to financial wellbeing, they are often vulnerable to falling prey to high-interest short-term loans.

Battle Lines Are Drawn Despite the actions of unscrupulous lenders, the instant loan industry is a $52 billion industry. The industry could not have reached this size if all borrowers were defaulting or rolling over their loans.

The majority of instant loan borrowers do repay their loans, and they successfully leave payday borrowing behind.

Regardless, payday lenders have found a new enemy in the form of consumer advocacy groups.

In Texas, the Texas Faith for Fair Lendingformed as a coalition of groups opposed to the industry.

They successfully achieved the regulation of payday lending locations in several Texas cities.

Meanwhile, in Montana, voters capped instant loan interest rates last year.

In Missouri, the Missourians for Responsible Living organization pushed for limiting interest rates, fees and finance charges on a broad range of financing, including payday loans.

This trend of opposition is a result of minimal regulation for lending in some states, but its also a direct consequence of usurious lenders actions. While not all lenders are usurious predators, there are clearly enough of them to anger borrowers and activists.

Exacerbating the problem is a lack of financial education and awareness. The average American high schoolor college eventypically lacks courses and classes on financial budgeting.

This lack of education combined with the financial squeeze that nearly everyone has suffered in our recession-burdened country has caused, and will continue to cause, opposition to payday lenders.

It remains to be seen if in due time that payday lenders will be forced to operate completely online.

Should this happen, it may be both a blessing and curse: a blessing for payday companies that may have minimal overhead and easier access to customers, and a curse to borrowers who will be forced to work with online lenders that are much more difficult to police and regulate.

Thu, 26 Jul 2012 23:23:12 +0000isaac2241 at http://loans.orgA Look at Who Borrows Cash Loans and Whyhttp://loans.org/payday/articles/look-who-borrows-cash-and-why

Cash loans, also called payday loans, were once not so commonplace in our societybut then again foreclosures, vehicle repossession, unemployment, and public service announcements on child hunger in America werent either.

Nearly everyone has been affected by the recession. For some people, the recessionor depression in the eyes of manyled to the end of home ownership, a lost college education, or the termination of a career. Nearly everyone has tightened their belts since the recessions full onset.

As the recession loomed over the country, demand for payday loans soared as more Americans lived hand-to-mouth. With that transition demand for payday loans also rose.

Low-income ethnic minorities are typically viewed as the average borrowers of cash loans. But contrary to popular belief, not all borrowers of cash loans are minorities. A recent analysis of the cash loans industry grants us insight into who the actual borrowers of this type of financing are.

Hard Data of the Pew Survey Twelve million Americans borrow payday loans with every passing year. Each borrower takes out an average of $375 annually, but they spend a massive $520 on interest. A more detailed analysis of borrowers reveals their demographics. th

Cash loan borrowers are usually white females between the ages of 25 to 44, according to a July 18 Pew Center survey analyzing payday lending in America.

Aside from this group, there are others that are inclined to borrow payday loans as well. These are people without four-year college degrees, people who rent homes, African Americans, divorcees, and workers who earn less than $40,000 a year according to the Pew Center data.

Even though it is common knowledge that lower income earners are more likely to borrow payday loans, there are certain attributes that can predispose a person to borrowing. Homeownership plays a role since low-income homeowners are less likely to borrow compared to high-income renters.

Statistics from the Pew Center show that 8 percent of renters that earned $40,000 to $100,000 have borrowed cash loans. Compare this to 6 percent of homeowners that earned $15,000 to $40,000 who borrowed cash loans.

Common (outsider) belief dictates that people only borrow payday loans for emergency expenditures, such as car repairs or unexpected medical problems. However, we can see this is not true since Pews data reveals that cash loan borrowers take out an average of eight loans annuallyeach for a duration of about 18 days. Excluding the incredibly unlucky, it is clear that most cash loans are for regular expenses.

And Pews data supports that notion.

According to the Centers statistics, 69 percent of borrowers used their loan to pay for regular expenses. Those regular expenses include utilities, credit card bills, rent, mortgage payments and other necessities. Only 16 percent of polled borrowers actually used their loan for an unexpected expense like car repairs and medical bills.

Although payday loans are marketed as short-term emergency loans, in reality, most borrowers used them for recurring living expenses and become indebted for an average of five months, said Nick Bourke, project director of Pews Safe Small-Dollar Loans Research.

Imagine a New World Perhaps most interesting is the contemplation of a worldor at least a scenariowithout cash loans. A sizable 81 percent of borrowers who were polled said that without cash lending, they would simply cut back on expenses like food and clothing. They also said they would attempt to borrow money from family or friends as well as selling and pawning possessions. 44 percent stated they would borrow from a bank or credit union while 37 percent said they would use a credit card. Only 17 percent said they would borrower from their employer.

The rise in interest in cash lending has led to some abuses and usurious practices in the past. This begs the question: how has regulation impacted the usage of cash loans?

In states with the most ironclad regulations, only 2.9 percent of residents said they had borrowed a loan within the last five years. In contrast, 6.3 percent of people reported borrowing a payday loan in the last five years in states with only some regulation and 6.6 percent of people borrowed a payday loan in states with minimal regulation.

Finally, in states where there are no retail lending stores, only five out of 100 potential borrowers opt to borrow cash loans online or from other alternative sources. The survey found that 95 percent simply opted not to use cash lending.

As the recession continues to strangle the countryand as the threat of a second recession remains an ever-present possibilityfuture research will reveal who continues to borrow cash loans. America will have to keep holding its breath and hope for better days with minimal cash lending.

Fri, 20 Jul 2012 23:18:50 +0000isaac2228 at http://loans.orgCash Advance Loans are a Mortons Forkhttp://loans.org/payday/articles/cash-advance-are-mortons-fork

Payday loans present society with a paradox. These forms of borrowing are meant to serve those who have bad credit scores. In order to satisfy that demographic, lenders charge high fees as a means to protect themselves from losses. However, the bad credit population is the very last group

that needs to be subjected to high fees, given their financial situation.

Usually, those who apply for cash advance loans are those who absolutely need the money.

Emergency situations, unexpected expenditures, looming bills that are in danger of being lateany of these circumstances could justify the need for a quick paycheck advance.

Consequently bad credit borrowers facing these obstacles have to make one of two equally unpleasant choices: take out a cash advance loan at an incredibly steep fee, or go without the money they need to conquer their current financial dilemma.

Either decision often results in economic hardship.

This payday loan catch-22 is a perfect example of a concept that was first identified over seven centuries ago.

Two Roads Leading to the Same Destination John Morton was a famous 15th century English prelate and Archbishop who became immortalized after giving a statement about tax collecting.

Morton said that nobody should be exempt from government-imposed taxes. According to his logic, the rich have an abundance of money, and thus can easily afford to meet the Kings taxes. The poor, on the other hand, are forced to save their money if they are to successfully live, which consequently means they have a stockpile of money in which they can draw from to meet the Kings taxes. Because Morton believed that both the rich and the poor can afford to spare money, he announced that everybody should pay taxes.

This logic (or lack thereof) has been used to describe any unfortunate predicament in which somebody must choose between two equally unpleasant choices (i.e. to be rich or poor, it matters not: you still pay taxes). Such situations have been aptly dubbed a Mortons Fork.

Consider one of the most distinct Mortons Forks in western history: being denounced as a witch in the 17th and 18th centuries.

According to common belief at the time, witches floated in water while non-witches sunk. Women who were accused of being witches would be tied up and tossed into a body of water. If the accused floated, she would be removed from the water and burned alive for being witch. However, if she sunkand thus drownedshe would be deemed innocent.

Either outcome resulted in death.

Our Current Financial Mortons Fork Cash advance loan borrowers may feel like theyre forced to choose between two seemingly different roads, only to find thatregardless of their initial choicethe final destination is the same.

If they take out a cash advance loan, they agree to borrow money at near usurious interest rates. If they dont borrow money though, they fail to repay whatever emergency expenditure has arisen.

Either choice results in negatively impacting ones financial situation.

Interestingly, while both paths of this Mortons Fork lead to the same destination, each path serves as the foundation for the separate arguments of both industry supporters and industry opponents.

Supporters say that payday loans need to exist, otherwise our bad credit population would be forced to go without financing.

Opponents say that cash advance loans shouldnt exist because the high rates are predatory and unjustifiable.

Neither supporters nor opponents (at least en masse) seem savvy to the fact that both of their roads (usually) lead to the same destination.

How Can These Roads Be Made More Unique?

But that begs the question, How do we correct this?

How can we offer unlendables cash when they need it, but at the same time protect the cash advance loan lenders who are putting their money on the line?

The government recently created the Consumer Financial Protection Bureau (CFPB) to figure out a solution to that exact question.

Their hope is to improve cash advance loans to be both helpful and secure.

While the CFPB has yet to resolve this issue, they have announced that theyre hoping to provide an intelligent and acceptable answer after listening to the arguments from both consumer advocates and industry insiders alike.

If there is a way to make these two paths unique, and thus put an end to this Mortons Fork, it will only be found by approaching this problem as the CFPB currently is.

Tue, 17 Jul 2012 21:14:46 +0000alex2219 at http://loans.orgThe Payday Loan Industrys Campaign Contributionshttp://loans.org/payday/articles/industry-campaign-contributions

During the infancy of President Obamas current term, he called for federal regulation to instate a cap on all payday loan interest rates. Obama has sought to restrict the steepoften argued to be usuriousfees on payday loans since his time in the Illinois State Senate. While such a law has yet to be implemented on the federal level, the creation of the Consumer Financial Protection Bureau (CFPB) has helped the nation take one step further towards meeting the presidents goal.

As support for federal oversight of payday loans gains momentum, the short-term financing industry has been caught reaching its hands into their pockets and handing money over to our representatives. Ambassadors from the payday loan business have been stationing themselves in Capitol Hill, begging willing politicians to accept their money.

While not specifically pleading for protectionthat would be briberylobbyists are handing over substantial sums of money to politicians, most likely under the guise of a wink.

Many might expect that Republicans benefit most from payday lobbyists, given the fact that Republicans are often associated with bankers, but surprisingly, over the past few election cycles, payday loan lobbyists have favored representatives from the Democratic Party.

Here is an analysis the payday loan industrys campaign contributions over the last two election cycles. Pay special attention to the affiliation each recipient has with the industry or a notable position of power that could affect the industry.

In 2008, the top recipients of campaign contributions from payday loan lobbyists were: Politician 1. Tim Johnson

Party/State Notable Affiliations D-SD

2. Dennis Moore D-KS

Amount Received

The then Chairman of the Senate Subcommittee on Financial Investigations

$47,400

Represented the district in which QC Holdings, a major payday loan company, is headquartered

$34,419

$30,750

3.

Carolyn Maloney

D-NY

Former chair of the House Subcommittee on Financial Institutions

4.

Richard Shelby

R-AL

The then ranking member of the Senate Banking $25,560 Committee

5. Jeff Sessions

R-AL

Poised to become a member of the Senate Judiciary Committee, which he later becamein 2009

Kendrick Meek

D-FL

Historically stood against the payday loan industry by $23,650 proposing interest rate caps

7. Chris Dodd

D-CT

The then Chair of the Senate $22,900 Banking Committee

8.

Spencer Bachus

R-AL

The then ranking member on the House Financial Services $22,500 Committee

9.

Jeb Hensarling

R-TX

Member of the House Financial Services Committee

$20,000

10.

Mitch McConnell

R-KY

The Senate Minority Leader

$18,600

6.

$25,150

Contribution information attributed to CREW's Payday Lender$ Pay Up, 2009.

In 2010, payday loan lobbyists upped their payroll, giving contributions to the following top recipients:

Politician

Party/State Notable Affiliations

Amount Received

1. Kendrick Meek D-FL

Soared to the top of the industry's contribution list after historically supporting $53,900 payday loan interest rate caps

Carolyn 2.

Maloney

D-NY

Ranking member and former Chair of the House $48,400 Subcommittee on Financial Institutions

3. Harry Reid

D-NV

Senate Majority Leader

$43,900

4. Jeb Hensarling R-TX

Vice Chairman of the House Financial Services $37,100 Committee

5. Kevin Yoder

R-KS

Represented the district where QC Holdings headquarters were located

Debbie 6. Wasserman Schultz

D-FL

Chairman of the Democratic $27,500 National Committee (DNC)

7. Heath Schuler D-NC

Proponent of H.R. 2563, also called the Payday Lending $26,000 Reform Act of 2009

8. Pete Sessions

Chairman for the National Republican Congressional Committee (NRCC)

$24,900

9. Travis Childers D-MS

Member of the House Financial Services Committee

$24,500

10. Gregory Meeks D-NY

Member of the House Financial Services Committee

$22,500

R-TX

$34,450

Contribution information attributed to CREW's 2011 Update, Payday Lender$ Pay Up.

Wed, 20 Jun 2012 17:29:17 +0000alex2178 at http://loans.orgWhy a Payday Loan May Be Right for Youhttp://loans.org/payday/articles/why-loan-may-be-right-you

The country is currently going through hard times given its dismal job opportunities and slow

economic growth. The ongoing recession makes it difficult for many people to pay for basic living expenses in addition to timely monthly payments on their homes and cars. Given the times, more and more people are seeking assistance from payday loans.

A payday loan is essentially a cash advance that is secured by a borrowers post-dated check or by electronic transfer. A payday lender will hold a borrowers post-dated check until the borrowers next payday. Once that day arrives, the payday lender will deposit the check and claim their money unless the borrower extends the loan through a practice called rolling over.

This short-term financing option is how some people are able to make payments on time, avoid mounting debt, and prevent additional fees derived from late bills.

There are a number of reasons a payday loan may be the right fit for a potential borrower.

First, unexpected expenses may arise at the most inopportune times. Car accident expenses, funeral expenses, or sudden medical expenses are just a few of the reasons that a payday loan may be sought out. These loans make it easier to get by to the next month since they indiscriminately provide cash to virtually anybody with a checking account.

Second, unlike most traditional loans, which can potentially take days or even weeks to receive approval, a payday loan allows a borrower to have cash in hand in less than 24 hours.

Finally, not every borrower has excellent credit, nor does every borrower have valuable assets that can be used as collateral for traditional loans. Borrowers with poor credit and no collateral are able to qualify for payday loans since this financing option doesnt have a credit requirement or security requirement outside of a postdated paycheck. Due to these relaxed conditions, payday loans are the only type of loan available to some borrowers.

One drawback, however, is that payday loans can increase in amount dramatically over time, which, for some, can lead to perpetual indebtedness. But assuming borrowers have a plan to repay their cash advance by their next payday, these short-term financing opportunities are a great way to come into quick money at a moments notice. Borrowers who believe they can catch up on their finances by the time payment is due may reap the benefits from payday loans without worrying about their potential drawbacks.

For borrowers not quite convinced that payday loans are right for them, there are other alternatives.

One such option is applying for small loans from a financial institution like a bank or a credit union.

Unfortunately, however, small loans from traditional lenders often come with much more stringent qualification requirements.

Thu, 07 Jun 2012 23:15:43 +0000alex2163 at http://loans.orgPayday Loans for the Military Versus the General Publichttp://loans.org/payday/articles/military-versus-general-public

The United States possesses the most powerful military the world has ever seen. Stationed in nearly every country on Earth, the U.S. armed forces use their might, technology and prowess to protect, serve, and assist not only our own nation, but others as well. When they return home, however, our service members dont always receive the treatment they deserve. The Vietnam War is perhaps the most blazing example, but theres also a lesser-known facet in which our troops have been victimized, preyed upon, and taken advantage of. That area is in the world of financing, particularly by payday loan lenders. In fact, our current and former soldiers have been targeted by unscrupulous lenders to such an extent that those lenders have drawn the ire of Congress, and now must operate within the confines of protective law that shields our military from bad lending practices.

But payday loans havent only hurt our military, so why is it that our military is the only group of people that have received blanket protections from these short-term lenders? Thats not to say our soldiers shouldnt be protectedthey dedicated years of their lives to protecting us and our country, and the least we can do is protect them from financial enemies here on the mainland. However, its interesting that our lawmakers feel payday loans present dangers to our military, but that they dont seem to feel our general public is vulnerable to those same dangers.

Payday Loans and the Dangers They Hold Borrowers looking for payday loans are essentially in the market for cash advances, or the acquisition of money before their next paycheck. Theyre backed by a postdated check thats written for the amount of the principal plus any interest or fees that a lender charges. This type of financing usually has no credit limitations, which prompts lenders to charge highoften deemed excessive and usuriousfees.

Additionally, because payday loans lack credit checks, prompting those with bad credit to turn to them, consumer advocates say they prey on the poor, the underprivileged, and the financially nave.

Our service members are often generalized to belong to the latter category, with consumer advocates proclaiming that soldiers time away from the mainland and everyday life prevents them from learning not only the intricacies of the financing world, but even the basic concepts.

A media release from the office of Bill Nelson, a U.S. Senator from Florida, said that the financial navet and regular paychecks made young enlisted troops perfect targets for a growing industry of lenders who bet that high-interest, short-term loans cannot easily be repaid.

Siding with such sentiments, the Department of Defense submitted a report on predatory lending practices directed at members of the armed forces, which outlined in detail the problems with payday loans and the methods in which lenders preyed upon our service members.

Naturally, payday lobbyists mounted a full-fledged attack, trying to sway Congress to their side. But then the Military Officers Association of America counterattacked with a powerful remark: Theres a clear-cut line here: Congress must decide between supporting the troops or supporting the payday lenders who are leeching off them and hurting military families and military readiness. Theres no halfway as far as were concerned.

And Congress did decide: beginning on October 1, 2007, the John Warner National Defense Authorization Act for the Fiscal Year 2007 became active, prohibiting payday lenders from charging more than 36 percent interest to military borrowers.

A Step in the Right Direction While 36 percent interest sounds incredibly high when compared to other types of financing, such as

mortgages, which are now averaging between the high 3 and low 4 percents, its a massive limitation on the short-term industrys usual practices.

Most payday loans come with fees around $15 per $100 borrowed. If thats converted to an annual percentage rate (APR), were looking at 390 percent.

Comparatively, 36 percent is more than welcome.

But while this is a step in the right direction theres an obvious problem still looming over this topic: the general public is still subjected to 390 percent (or higher) interest rates.

There are plenty of people in the military who are fiscally responsible and economically savvy.

Conversely, there are plenty of soldiers who are not. That exact same dichotomy exists in the general public.

We have plenty of people from all walks of life who know how volatile that payday loans can be if rolled over multiple times. But on the other hand, there are those who cant even grasp that payday loans can be dangerous to their financial health. And that begs the question: if we have laws in place to protect one group of citizens, why doesnt Congress protect another group subject to the same predatory practices too?

While, thankfully, our military protected from predatory practices, its not very clear why the general public is seen as less nave if were going to consider Congresss above-mentioned reasoning behind enacting the military-protection law.

Mon, 07 May 2012 19:37:42 +0000alex2117 at http://loans.orgPayday Loans and the Biblehttp://loans.org/payday/articles/payday-loan-and-bible

Depending on translation, the word money usually appears in the Bible more than 120 times. If the words wealth, gold, silver, poverty, usury, stealing, and debt are included in the count, that number grows significantly.

In fact, the Bible contains more passages about money and possessions than heaven, hell, or the return of the Messiah. There are 500 Bible verses on prayer and less than 500 on faith, but more than 2,350 on money and possessions, according to Crown.org, a Christian organization that offers advice on money-related issues.

With such emphasis on money, possessions, and debt, anybody familiar with the Christian Bible would undoubtedly agree that the religion considers these themes to be very important to the faith.

Couple that importance with the themes of love, acceptance, and forgiveness that the religions figurehead, Jesus Christ, preached, and most would likely come to the conclusion that lending and

Christianity can only co-exist under controlled and careful circumstances.

But if thats the case, how can some Christians associate themselves with, what some call, a predatory industry? How has a recent study found that payday loans are more prevalent in areas of dense Christian conservatism?

What are Payday Loans?

If you lend money to any of my people who are in need, do not charge interest as a money lender would. Exodus 22:25 NLT Payday loans are the most prevalent form of short-term financing available. Theyre a type of financing that borrowers can get almost instantaneously, regardless of their credit score. Due to this disregard of financial history, borrowers from all walks of life can secure payday loans with little more than a postdated check and a bank account.

But the problem with payday loans is that they come with very steep fees. Borrowers can usually expect to pay around $15 per $100 borrowed. However, this repayment is due on a shorttermusually on a borrowers next payday, hence the name of the loan.

If borrowers find theyll be short on cash come their next payday, then lenders usually offer whats called a rollover. Rollovers occur when a borrower takes out a second payday loan to repay the first.

However, when a borrower begins rolling over their payday loans, they often find themselves tumbling down a rabbit hole of debt. With each rollover, the bill due on their paycheck grows, and they find their demand for a rollover even higher.

As they sink further and further into this debt trap, the borrower watches his or her paychecks dwindle with each successive rollover.

This mechanism thats inherently built into the way payday loans work is what has consumer advocates up in arms. Due to the fact that those who are financially stable have access to other types of financing, and that typically the only people interested in these loans are those who are in poor financial situations, consumer advocates believe that payday lenders are naturally predatory.

Predatory lending and evoking usurious fees are arguably one of the furthest things from Christs teachings about loving and helping those in financial need.

An Ironic Finding Better to have little, with godliness, than to be rich and dishonest Proverbs 16:8 NLT Professors Christopher Peterson and Steven Graves, from the S.J. Quinney College of Law and California State University, Northridge, respectively, hypothesized that the church would agree that predatory lending practices are against Christs teachings. They hypothesized that given the biblical condemnation of usury, there would be aggressive regulation and less demand for payday loans in [conservative Christian] states, according to an interview by Newsweek.

But what they found was the direct oppositeat least statistically speaking.

We [mapped payday lenders] nationwide, and once of the patterns that started to emerge was a lot of density in the Bible Belt and in the Mormon mountain West, and so we started to try and come up with some way to think about that carefully, explained Peterson in the interview. We also created an

index that measured the political power of conservative Christian Americans. Whats interesting and surprising to us is that we found a strong correlation between the number of payday lenders within a geographic area and the political power of conservative Christians within a state.

Feel free to read the professors findings in their report, Usury Law and the Christian Right.

Why is it legal there?

Hypocrite! First get rid of the log in your own eye -Matthew 27:5 NLT The professors suggest that conservative Christian states are more permissive of this industry and have been less restrictive with their regulatory lawsbutsay that they are not arguing that the reason for the large amounts of payday lenders isbecausethey are in conservative Christian states But in a sense, that just begs the question: its legal there why is it legal there? Peterson said in the interview.

With so many Bible verses on money lending, on treating the poor with respect and love, and on avoiding usury, how could states with conservative Christians in power allow the rampant spread of payday lenders within their borders?

Peterson says the answer to that question is more of political speculation, but he believes it is largely due to the fact that conservative Christians aligned themselves with the conservative Wall Street businesses in the 1980s and 1990s. As a result, Christians have since become more tolerant of big business practices, so long as those practices dont infringe on the social issues that Christian politicians feel strongly about.

In other words, if big businesses (payday loan lenders) avoid getting involved in social issues, conservative Christian leaders will stay away from opposing legislation that will hinder big businesses.

But by allowing big business to run rampant, conservative Christian leaders have subjected the people they govern to the hostile wasteland of predatory lending. While something should be said for personal responsibility, and the repayment of debts, the intentional preying upon the poor is simply unacceptableat least from a Christians standpoint.

Wandering Stars I say this because some ungodly people have wormed their way into your churches, saying that Gods marvelous grace allows us to live immoral lives. The condemnation of such people was recorded long ago, for they have denied our only Master and Lord, Jesus Christ. Jude 1:4 NLT Then there are those on a whole different plane: those who try to use the Bible to deceive and trick those around them.

Paydayloanprayer.com, a website that claims to offer Christian payday loans for those times when borrowers feel like Jonah, attempts to bind itself to the Christian faith in a manner nothing short of disgusting.

Consider the atrocious example of when one could use a Christian payday loan, as stated by Stan B., the supposed secretary of the company: Sometimes, when you black out and bring home some girl from the bar whose name you cant even recall, and she robs you while youre still passing out drunk, you need some quick cash to get you back on your feet.

The website hosts a plethora of articles that continue with the religious rhetoric, calling opponents of their industry the Devil, saying that their services are miracles, and alleging that the accessibility of payday loans proves God exists.

They are the shameless shepherds who care only for themselves. They are like clouds blowing over the land without giving any rain. They are like trees in autumn that are doubly dead, for they bear no fruit and have been pulled up by the roots. They are like wild waves of the sea, churning up the foam of their shameful deeds. They are like wandering stars, doomed forever to blackest darkness.

Jude1:12-13 NLT Religious or Not, Why do Payday Loans Exist?

Christian, Jewish, Muslim, Mormon, Scientologist, Agnostic, or Atheist, most everybody borrows money at some point in their life. Regardless of religious affiliation or lack thereof, many encounter financial difficulty as well. Payday loans exist because theres an extremely large demand for shortterm financing that will disregard credit score history.

Without such a service, borrowers would be forced to either circumvent the law or approach illegal loan sharkswhich often prove to be far less forgiving than even the steepest of payday lenders.

Despite their demand, however, payday loans need a fix.

Until an alternative is devised, there needs to be tighter legislation on usurious fees, rollovers, and predatory advertising tactics. Its surprisingand admittedly disappointingthat those who read and base their life on the teachings of one of the most popular religious texts dont see this and dont stand up for their brothers and sisters who are in financial trouble.

Tue, 24 Apr 2012 22:51:35 +0000alex2093 at http://loans.orgPeer-to-Peer Payday Loan Lendinghttp://loans.org/payday/articles/peer-to-peer-lending

When consumers deposit their money into bank accounts, the bank protects that money and uses it to issue loans to others. In exchange for using consumers money, banks pay them with miniscule interest. For a few thousand dollars, the bank usually pays out a couple of cents each month. Only when a consumer has hundreds of thousands of dollars in a bank does that interest payment turn into something substantial.

But what if those who protected our money began offering a way for us to earn more than a fraction of a percent in interest? What if they began offering 5, 10, or even 12 percent interest?

Some institutions are allowing everyday consumers to use their money to fund payday loans. Those who borrow the payday loans then repay their debt a week or two later at double-digit interest ratesmost of which is then relayed to the owner of the money lent to that borrower. The peer-to-peer

payday loan platform is enabling consumers to gather more return on their money that would otherwise just be sitting idle in a banks coffers.

While peer-to-peer payday loan lending isnt common in the United States yet (at least not on the mainstream), it is growing in popularity in the United Kingdom.

Popularity Explosion The UK is finding peer-to-peer money exchanging websites growing in popularity with each passing day. Consumers with extra cash are naturally drawn to mediums that will provide them with the most return for savings, and traditional financial institutions are beginning to fall behind in this race.

Theyre simply not meeting that demand, as their interest return is laughable at best and offending at worst.

Whats more is some feel disgusted by the financial industry, as they watch bankers and financing firms grow wealthier and wealthier off the use of consumers money. But with this new peer-to-peer payday loan lending service, some consumers may be able to detach themselves from the banks hold and instead allow their money to work for themselves.

Theres a Moral Dilemma Though But this new trend comes with a moral dilemmaat least for some.

Payday loans have long been associated with predatory lending practices, and, as a result, have been condemned and ostracized by consumer advocate groups. The thought of using ones money to act as a payday lender is too much for some.

With this, you are essentially becoming a payday lenderand some people may feel uncomfortable with that, said Justin Modray, founder of the advice website Candid Money, to ThisIsMoney.co.uk.

But Tim Slesinger, the founder of one of these peer-to-peer payday loan sites called The Lending Well, argues that his sites services are not immoral at all. Were not looking to lend to the financially vulnerable, he said, according to BitterWallet.com. We want this business to be ethical for borrowers and lenders.

One measure Slesingers business has taken in order to ensure healthy business transactions is the refusal to administer financing to anybody who already has an existing loan theyre paying off.

Thats more than can be said about most payday lenders here in the States.

Will America Follow?

With the creation of the Consumer Financial Protection Bureau (CFPB) it may be very difficult for peer-to-peer payday loans to gain footing here in the United States.

Richard Cordray, the CFPBs director, has already made his bureaus position clear on their desire to regulate payday lending to an extent that makes the industry healthy for borrowers and lenders alike. And the peer-to-peer platform would likely make the CFPBs job difficult, as these services are operated as private businesses, not traditional lending institutions.

Then theres the matter of whether or not the American public would even accept and partake in the service.

Modray emphasized that he does not believe these websites and services should be viewed as an alternative to ordinary savings accounts. Consumers dont receive the same protections that they do with traditional banks. If a peer-to-peer company goes under, for instance, consumers money is not insured like it is at government-approved banks, meaning consumers would lose all of their money.

Compare that to the $250,000 guarantee at all FDIC-insured banks.

But for the gambling sort, peer-to-peer payday loan lending may very well be an attractive avenue to gain large returns on ones extra cash just sitting idle in a traditional banks vaults.

Wed, 04 Apr 2012 17:28:49 +0000alex2050 at http://loans.orgPersonal Responsibility Versus Government Oversighthttp://loans.org/payday/articles/personal-responsibility-government-oversight

A common platform for debate between the countrys two largest political parties involves the role of government. Conservatives often tout the importance of personal responsibility, arguing that freedom is only achieved if people decide their own fate instead of allowing others to decide that fate for them. Democrats are often on the other side of the fence, escorting in a more powerful government, usually on the grounds of promoting equality amongst the socioeconomic classes.

Interestingly, this same platform can be used as a lens to view the short-term lending industry and to consider some of the positions proponents and opponents have on payday loans.

A Quick Summary of the Arguments In the world of payday loans, the line drawn in the sand for this topic of personal responsibility versus government oversight doesn't separate political parties, but two main players in the payday lending industry: consumer advocates and lenders.

While consumer advocates arent involved in the actual transactions, they are an outspoken group whose actions and words have played a large part in the regulation and opinion of payday loans.

They want more government oversight in order to prevent payday loan lenders from preying on consumers. They see the high interest rates, short terms, and physical location of store-front payday lenders as predatory and unacceptable. If most advocates had it their way, payday loans would be completely abolished, but others will settle with simply having the industry more regulated.

Lenders, on the other hand, are fighting to keep the government away from their industry. Due to their vested financial interest in keeping payday lending as profitable as possible, few can blame them. These loan originators and their supporters feel allowing the government to interject in this industry is discrediting the intelligence of their clientele: just because many short-term financing borrowers make low wages, it doesnt mean they dont understand financial contracts or need somebody holding their hand while they make decisions.

A Delicate Balance

For outsiders looking in, its difficult to make a firm decision as to which party is correct. While both of the above-mentioned camps are usually very passionate about their stances, even the most extreme advocates and the most money-hungry lenders can at least see where the opposing viewpoints are coming from. Thats precisely why little has been done to either regulate or deregulate the payday loan industry: lawmakers dont know whether there truly is a problem with short-term lending or what the fix to that problem is.

The Consumer Financial Protection Bureau (CFPB), headed by Richard Cordray, is a perfect example of an oversight agency thats caught in the middle of these two feuding viewpoints. The CFPB was created in 2010 as a result of the Dodd-Frank Bill, and has been designed to protect the public from poor lending practices. With the mortgage industry, the CFPB has had little trouble establishing where it stands, as the line drawn between moral and immoral has been far more pronounced. But in the world of payday loans, the CFPB is still trying to gather intelligence to determine what course of action is necessary.

We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them, said Cordray in a press release. We will systematically gather data to get a complete picture of the payday market and its impact on consumers.

CFPB will need to delicately balance all of the needs and desires of those involved in the payday loan industry.

Usury and Alternatives Cordrays comment about the need for emergency credit plays a huge role in why payday loans are permitted to exist in the first place. People need access to short-term financing, especially those who make low wages. The problem is borrowers seek payday loans because theyve exhausted other all other legal means of financing.

If those other means have been depleted, that usually means borrowers have suffered severe credit dings. When borrowers have poor credit, lenders are usually safe to assume that theyre of higher risk. Transactions of higher risk call for higher interest rates so that lenders can make up for defaults with higher payments. And higher interest rates typically lead to more defaults.

Some call the higher interest rates usury, but due to the default rate, lenders must charge high interest in order to stay in business.

And thats the payday loan paradox: its a cycle where both lender and borrower are looking out for their best interestsbut in order for it to exist, those in need of money must endure poor loan terms that work to perpetually keep them in a state of financial hardship.

Additionally, lenders argue if payday loans were abolished, then those in need of emergency money would be forced to turn to loan sharks. Those illegal lenders compensate for their lost money with much steeper fees or other non-monetary payments that are far less favorable to borrowers.

While the government decides where exactly they stand on this issue, the best weapon both consumer advocates and lenders have is education. If both of these groups work to inform borrowers of the risks involved with payday loans, then they will both promote a healthier lending environment.

And a healthier lending environment may very well indirectly satisfy the desires of both consumer advocates and lenders, as borrowers will become less and less victimized, and the government may find itself less needed.

Tue, 27 Mar 2012 18:26:57 +0000loansorgadmin2035 at http://loans.orgPayday Loan Legislation to Stop the Wild West of the Lending Markethttp://loans.org/payday/articles/payday-loan-legislation-stop-wild-west-lending-market

Jeff Merkley, a Senator for the state of Oregon, announced a piece of federal legislation he hopes to propose to congress that would greatly limit the practice of payday lending throughout the country.

Merkley sent a letter to the Consumer Financial Protection Bureaus (CFPBs) director, Richard Cordray, for support in his quest to limit payday loans in the United States.

Millions of Americans are affected by the abusive and deceptive payday lending practices across our country and over the internet, the senator said in a press release. While Oregon is lucky to have state legislation in place to stop the worse [sic] practices, there are still loopholes and offshore websites that are dragging Oregon families into black holes of debt. We have to bring order to the Wild West of the lending market.

A New Sheriffs in Town Merkleys argument that online payday loan lenders are exploiting his states citizens isnt an exaggeration. Online and offshore payday lenders have been preying on citizens across the nation, charging exorbitant interest rates and late fees, even when certain states already have laws protecting their residents from such practices. Since the online lenders can operate anonymously or from a location that bars legal repercussion, they continue to volley their offers to the unsuspecting, leaving legislatures fuming and frustrated at the inability to prevent such actions.

In the senators three-step proposal, he hopes to tackle the issue of disclosures, loopholes, and oversight.

According to the Merkleys press release, lack of disclosure helps online payday loan offers mask the true identity of the lenders, making it hard for both consumers and law enforcement to accurately identify who is behind the website. When these anonymous lenders identities are hidden, they often provide debt collectors with private consumer information. In turn, that can lead to collectors defrauding consumers into paying debts that they dont owe.

If the senators legislation is passed, he hopes to close all loopholes that currently allow offshore payday lenders to operate and even garnish the wages of unsuspecting borrowers in the United States. The power offshore lenders have is so immense that some legal lenders located in the country are now trying to structure the operations to make themselves appear offshore.

Finally, the legislation hopes to hold banks to a higher standard and force them to support healthy banking practices. This is particularly important since an increasing number of traditional lending institutions are now beginning to offer payday loans, or similar variants.

In support of this three-pronged attack on the payday loan industry, Angela Martin, the executive director of the non-profit Economic Fairness Oregon, said Its an unfortunate truth that each time we find a way to help people on to more of their money, theres a new tactic or scam aimed to strip them of it. This is why it is so important for us to have strong and vigilant leadership on issues of consumer protection.

Current Leadership on Consumer Protection The current head of consumer protection is the CFPB, a new agency that was formed under the Obama administration. Headed by Mr. Cordray, the CFPB has begun its extensive campaign against unscrupulous activity taking place throughout the entire financing industry. From mortgage and auto loans to student and payday loans, the CFPB is attempting to leave no stone unturned.

In his letter to Director Cordray, Merkley claims that over 75 percent of payday loans are originated to cover the principal of an existing payday loan. Additionally, around 12 million borrowers are caught in long-term debt from financing opportunities marketed as short-term solutions.

To stop such predatory practices, the senator hopes the CFPB will act quickly and establish strong national rules to stop unfair, deceptive, and abusive practices.

The letter was not only signed by Merkley, but also by Sen. Daniel Akaka (D-Hawaii).

Will the Wild West be Tamed?

While Merkley attempts to bring order to a wild and chaotic industry, his broad sweep is far too general and all-encompassing to be implementedat least in the current, albeit early, form of this proposal.

Regulating illegal payday lenders, offshore online lenders, and atrocious interest rates are fine; few would disagree with that. But the letter addressed to the CFPB is filled with flowery language, lack of citations, and sensationalist claims. Not all lead generating sites act as shady intermediaries, selling users information on the black market. Consumers in need of short-term financing are not likely to find themselves worse off than if they never used a payday loan. And payday loans dont inherently impoverish many American families (they certainly can prove to be a means to that end, but such an end is often achieved by irresponsible borrowing as well).

That being said, Merkleys proposal is interesting, and its nice to see some state representatives getting behind meaningful and needed financial reform. It will be exciting to see how this proposal evolves as it readies to become actual legislation.

Wed, 14 Mar 2012 21:57:57 +0000loansorgadmin2013 at http://loans.orgAvoid Being Victimized by Current Payday Loan Scamshttp://loans.org/payday/articles/avoid-loan-scams

The Internet Crime Complaint Center (IC3), which partners with the FBI and national White Collar Crime Center, has received call after call from people who feel theyve been victims of payday loan telephone scams. The IC3 investigates internet-related criminal complaints, and are taking these calls because the predators hiding behind their telephones claim to be representing payday lenders that borrowers found online.

According to the IC3, the typical payday loan scam involves callers who pose as representatives from the FBI, Federal Legislative Department, different law firms, or various debt collection agencies. The callers contact previous or current borrowers and claim the borrowers are delinquent on their payments. Borrowers are then threatened with legal action if they do not pay up on their debt.

The callers threats are then followed up by a barrage of calls to victims home phones, cell phones, relatives, and even places of employment.

Victims who comply with the predators demands often report handing over debit and credit information to the callers. Some callers then demand the victims take out a prepaid credit card to cover the remaining payday loan balance, and the callers then acquire the money on the prepaid card as well.

In some of the more sophisticated versions of this scam, some victims have even been visited by a live person claiming to be a delinquent payday loan processor. This person has been reported to show up at both a victims residence and place of employment.

If borrowers inquire about the payday loans they are supposedly delinquent on, the caller refuses to give any information on the alleged payday loan and instead becomes hostile, threatening, and abusive when asked, according to the IC3.

One former payday loan borrower named JanLaree Dejulius said she transferred $793 to a fake debt collector in April of 2010. The caller purportedly knew all of Dejulius personal information and details about the short-term loan she borrowed, which frightened Dejulius into believing the call was legitimate. Finally, when threatened with arrest, Dejulius wired the money over.

I was intimidated enough not to want to get arrested, Dejulius said at a Federal Trade Commission news conference in Chicago.

While its not entirely known how the scammers are receiving current and former payday loan borrowers information, it is believed the fraudsters have hacked unsecure or illegitimate payday lenders websites, or gathered personal information from borrowers who unknowingly filled out fake forms and questionnaires online.

Theyre not going after anybody who has a lot of money, said Dejulius of the scammers. It seems like they go after the vulnerable.

The IC3 warns the public that if they receive a call from somebody trying to collect a debt the recipient doesnt owe, they should: Contact local law enforcement agencies if they feel they are in danger Contact banks and credit card companies and inform them their accounts and information may have been compromised Contact the three major credit bureausExperian, Equifax, and TransUnionand ask that an alert be put on their file File a complaint at www.IC3.gov

If borrowers do currently have existing payday loans and a they receive a call from a debt collector, borrowers are urged to call the lender directly and confirm that the debt collector is legitimate.

Thu, 01 Mar 2012 19:01:57 +0000loansorgadmin1987 at http://loans.orgPayday Loans are not Immoralhttp://loans.org/payday/articles/not-immoral

There is currently a state-wide debate taking place in Missouri. Consumer advocates are upset over high annual percentage rates (APRs) associated with payday loans, and are trying to push legislation to institute an interest rate cap on these cash advances. In order for this legislation to go through their state government, though, they must receive a certain amount of signatures on a petition. The group called Missourians for Responsible Lending are representing these consumer advocates and spreading the petition out through online circles trying to gather the required signatures.

The opponent to the Missourians for Responsible Lending is a group called Stand Up Missouri, that claims to represent not payday loans, but installment loans. In the eyes of consumer advocates, however, thats merely semantics. Stand Up Missouri, funded by a man named Tom Hudgins, is throwing counterattacks across the web trying to thwart the petition from gathering enough support.

But as with most debates consisting of two very passionate parties, facts began to be forgotten, and opinionated mud-slinging began.

This election-esque race for gathering public support and slandering the other side reached its crescendo today when a supporter of Missourians for Responsible Lending published a short opinion article called Tom Hudgins is Immoral.

Baseless, Ungrounded, and Sensationalist Claims The title of the published article already lets readers know what to expect: a passionate, ad hominem attack more concerned with swaying the publics attention through emotion and name calling than presenting a sound and valid argument.

Consider some of the following excerpts: Lobbyists, such as Tom Hudgins, chairman of Stand Up Missouri, are spending millions to keep Missouri Payday Loans the most expensive in America.

Payday loan laws in Missouri are definitely loose when compared to some other states, but to make the claim that theyre the most expensive in America is one that requires cited sourcesor at the very least some kind of statistic for readers to work with. Particularly when Missouri law sets the limit of

a single payday loan at $500, whereas Idaho sets no cap on the amount a single payday loan can be given for. Additionally, Missouri has an APR cap on their cash advances. Idaho does not.

Or consider Utah, who does not have a maximum loan amount, an APR limit, a rollover limit, or a maximum number of outstanding payday loans a borrower can have running concurrently. If one wants to really stretch the limits of whats permissible with this type of financing, Utahs the place to do itnot Missouri.

And despite the fact that payday loans are an expensive form of borrowing, there is still a demand for them. According to an article published in the Fordham Journal of Corporate Financial Law, over 92 percent of borrowers felt that payday lenders provide a useful service, and chose to use these services despite the fact that over 91 percent of payday loan borrowers have access to other forms of credit. If the public felt this service hurt them, they wouldnt patron it.

At [payday loan] rates, a typical payday borrower will pay over $700 for a $300 loan.

The problem with this remark is the word typical. While its certainly possible to pay over 100 percent interest on a payday loan (if a borrower subjects themselves to rollover after rollover), its certainly not typical.

Under Missouri law, a borrower would need to receive a $300 payday loan and roll it over five times in order to hit that $700 for a $300 loan statistic. But according to the Fordham article, a 2001 Georgetown University study revealed that 60.1 percent of borrowers renewed [rolled over] their payday loans less than five times a year.

Assuming all borrowers took out only one loan a year, the typical borrower still wouldnt statistically hit the required five rollovers to reach the $700 for a $300 loan, as the opinion writer suggests.

Furthermore, Missouris Division of Finance itself released statistics revealing the average number of renewals is only 1.6otherwise read as 3.4 rollovers short of being typical. Contrary to the proponents ungrounded claim, the typical payday borrower gets nowhere near paying $700 for a $300 loan.

Finally, nowhere in this opinion piece does the writer make a real claim as to why Tom Hudgins is immoral. Hudgins is supporting an industry in which he is financially vested, but does that defy what we would call moral? Until Missourians for Responsible Lending begins using facts to support their claimsand article titlesit would behoove the group to stop with the sensationalism and the appeals to emotion.

Wed, 15 Feb 2012 20:40:43 +0000cesar1963 at http://loans.orgPayday Loan Rolloverhttp://loans.org/payday/articles/loan-rollover

No, its not mans best friend performing a trick for usbut some would still call it a trick nonetheless.

The payday loan rollover is, among other things, what causes critics of the industry to mount such vehemently hostile attacks against these loans. The rollover is unlike any other mechanism found in different types of loans, and acts like a trap door that is all too easy to pass through, but very difficult to open back up to return from. Its the rollover that births the heart wrenching stories we all hear regarding people who borrow several hundred dollars only to owe thousands upon thousands several years later.

The Anatomy of a Rollover The rollover is a device used by payday lenders in order to ensure profitability. Its a way to collect additional fees, and truth be told, the success of the industry in its current form relies heavily upon the rollover. Heres how it works: Imagine a payday loan that carries a $15 per $100 feean approximate annual percentage rate (APR) of 390 percent.

In order to acquire that loan, a borrower must write a check (or allow the lender access to the borrowers bank account, as is more common today) for $115 dollars. That check is understood to be cashed on the borrowers next payday, hence the name of this type of financing.

So ultimately this borrower pays $15 to receive a $100 cash advance. Thats not too bad, right? It definitely isnt when one considers the fact that payday loan borrowers are not subject to or judged by a credit check, they dont need to prove employment, and any outstanding debts are ignored. If somebody needs moneyand has to have it nowpayday loans are available and theyre a much better alternative to illegal loan sharks.

However, their biggest strength is also their biggest weakness.

Because the demographic that is inherently drawn to the mechanics of payday loans tend to be of the lower income bracket, they are subject to falling into a financial trap. Thats where the rollover! trick comes to play.

When the borrower's next paycheck comes about and they see bills piling up, some arent able to afford the $115 to pay off their lender, so they approach the lender for an extension of their payday loanan extension that requires yet another fee.

Thats a rollover: extending a loan by agreeing to pay another fee.

If the borrower rolls the loan over again, they must now write a check for $145. After just two rollovers, the borrower effectively paid $45 for a mere $100 loannearly 50 percent interest. Now just imagine if a borrower continues to roll this loan over again and again. After four more rollovers, the borrower would be pushing $105 in interest on his or her initial loan of $100.

Flattened by this Rolling Torrent Take this real life example into consideration: a woman named Sandra, whose story was told by Responsiblelending.org, is a single mother who sought a payday loan in order to pay off her utility bill.

Sandra took a cash advance of $300 at an APR of 342 percent. After struggling to make ends meet, she approached a financial confidant who quickly went from simply giving Sandra advice to becoming her support advocate. When all was said and done, that $300 payday loan rolled over so

many times that Sandra wound up shelling out $1,080 to finally pay it off.

But as Sister Berta Sailer ofOperation Breakthroughtold Responsible Lending, If you were choosing between taking a loan out of a place you knew was going to rip you off or having your kid homeless, what would you do?

Double-Edged Sword This evident problem with payday loans is, however, much more difficult to fix than one might initially think. It is one thing to say, Charge less interest, or, Put restrictions on the APR. But ultimately, the industry has such standards not because its full of money-sucking leeches (not to say theyre all benevolent beings either), but instead to ensure survivability.

Because payday lenders dont have any credit score requirements or collateral (save a check or access to ones wages), and because they lend to a demographic that is often inherently in financial trouble, they run a very high risk of default. That risk of default sits at approximately6 percent.

This means if a payday lender lent 10 loans of the type described above ($100 with a $15 charge), he can expect to make $150 in interest. But with a 6 percent default rate, that lender will lose approximately $60 of his $1,000 lent out. The total amount of money he will make on his initial $1,000 investment is his $150 profit less the $60 lost in defaults, for a total of $80.

If that same lender decided to go the route of self-immolation and offer these short-term, high-risk loans for a smaller interest ratelets say $8 per $100 lenthe would make a meager $20 profit on his $1,000 lent. And thats assuming he hits the average default rate of 6 percent. If thats any higher, this lender would fall underwater.

Thats the unfortunate paradox: payday loans are risky endeavors for both borrower and lenderbut at the same time, theyre a necessary safety net for the financial strugglers in society. Otherwise, borrowers wouldnt pay for their loans with stress and financial hardship, but rather with limbs and lives as less-than-understanding loan sharks would fill the demand for such a service.

While this double edged sword draws blood from both parties, there may (hopefully) be a fix on the horizon.

TheConsumer Financial Protection Bureau(CFPB) has taken off at a powerful speed, and seems to be adamant about taking both consumers and lenders concerns into consideration. Now that this government-sponsored oversight agency is up and running, perhaps they can prove to be the whetstone strong enough to dull this blade, and create policies that will be mutually beneficial for both providers and users of payday loans.

Tue, 07 Feb 2012 23:37:29 +0000loansorgadmin1948 at http://loans.orgPayday Loan Monitor May Prove to be Unbiased http://loans.org/payday/articles/cfpb-may-prove-unbiased

Last week the director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, made a public statement in Birmingham, Alabama, in which he introduced the industry of payday lending to his audience and informed them his bureau is seeking to remedy the flaws within that industry.

Immediately, payday loan supporters and industry-insiders leapt at the directors remarks in a defensive maneuver to thwart any sort of regulation that may come out of this bureau.

However, despite the recent negative reception the newly appointed director has received, his public announcement proved to be a refreshing, and admittedly unexpected, stance.

Make Informed Financial Decisions In one of his first major announcements as director, Cordray successfully brought the two parties his bureau is in charge of monitoring together: borrowers and lenders.

We deeply believe in empowering people so they can make informed financial decisions and take responsibility for those decisions, said Cordray in his public statement about payday loans.

Borrowers want to be educated about loans and the lending industry since, try as they might to avoid them, most will use loans to finance something in the future. Whether it is for a home, an automobile, their education, or an emergency situation requiring a cash advance, borrowers interact with lenders, and, as the CFPB stated, ought to be empowered to make informed financial decisions.

On the other side of the coin, the CFPB let those who issue payday loans know they will not be ignored or treated unfairly by letting them there is a line drawn in the sand measuring just how far a lender must go to protect those seeking their services. Cordray let lenders know that borrowers have the duty to take responsibility for their own decisions.

This impartial approach is the exact sort of attitude the CFPB needed to take when it comes to regulating payday loan industry. In a capitalistic society, both producer and user needs to be acknowledged and protectedand so far, the CFPB seems to be interested in doing exactly that.

Pre-Emptive Scouting The meeting that took place in Alabama wasnt meant to push policy, but instead to gather intelligence.

We came here to listen, to learn, and gather information on the ground that will help inform our approach on these issues, explained the director.

With over 19 million people taking out payday loans each year, Cordray felt it necessary to very carefully consider the experiences of both lender and borrower before making any industry-changing

moves.

On the CFPBs website, they asked readers to share their payday loan experiences on the comment board so the CFPB could get a better feeling and sampling for how this short-term financing has helped or hurt the borrowing community. But despite their intel-gathering, Cordray wanted to make it apparent that he wasnt immediately condemning payday lenders.

I want to be clear about one thing, he said. We recognize that there is a need and a demand in this country for emergency credit. At the same time, it is important that these products actually help consumers, and not harm them.

Controversy Surrounding the Director Such remarks couldnt come at a more crucial time either.

There has been much controversy floating around Richard Cordray and his position as director of the CFPB. Fortunately, the controversy hasnt been directed at him, but rather at President Obama, as the president allowed Cordray to assume position as director by recess appointing him.

Recess appointing is the act of appointing somebody to a position of power when the Senate is on recess, and thus unable to vote on an appointing.

However, this power was enacted after the Senate struck down the nomination on several occasions, and the recess appointment occurred after but a single day of the Senate not meeting together.

As a result, the presidents action evoked the ire of many Republicans, and caused some to accuse the countrys head of abusing power.

Regardless of what happened in the recent past, though, the fact remains that the countrys lending services are now being monitored by a government agency. So long as that agency continues with its impartial and unbiased approach, few should have a problem with their practice. And maybe, just maybe, we will see some forward movement that helps the payday loan industry as a wholeoffering new protections to both borrowers and lenders.

Wed, 25 Jan 2012 19:19:43 +0000alex1922 at http://loans.orgFinancial Institutions and Payday Loanshttp://loans.org/payday/articles/financial-institutions

When looking across opinionated message boards strewn across the internet, a common train of thought held by many is that payday lending is simply a legal way for predatory loan sharks to operate. As legislation continuously tries to regulate this type of financing, and groups on both sides

of the tracks emerge in support and in opposition, an ongoing cry has begun to ring once again: why do we, as a nation, allow such volatile loans to be legal?

Proponents of payday loans will immediately point to the fact that when people need money, they will get moneyone way or another. These check advances allow borrowers to obtain money in a safe and secure manner, whereas without this type of financing, borrowers may very well resort to lessthan-legal means of acquiring cash. Theyll turn to real loan sharksthe kind of lenders that dont respond to default by rolling loans over, but instead with baseball bats or worse.

Setting that assumption aside though, few would argue that payday loans are perfect in their current form. But despite this recognition that there is room for improvement, little has been done. This then begs the next question: why dont banks and credit unions offer a service similar to payday loans?

Some banks may claim they do, with direct deposit loans and other types with unique, branchspecific names, but theyre not quite the same. Rather, there are several prerequisites that many payday loan users, by definition, wouldnt satisfy. Ranging from a minimum amount in ones checking account to requiring direct deposit of a minimum amount, most check advance users simply dont meet banks requirements; otherwise they wouldnt be in the market for a payday loan to begin with.

Traditional banks of national or international stature simply dont need to take the risk of issuing payday-like loans. Theres a reason an entire industry has been built behind this type of money issuance, and thats because in order to make money on cash advances, it takes a lot of dedication, work, and specializationall for not nearly as high a payout as the interest rates would leave outsiders to believe.

Consider this example posed by Felix Salmon, a finance blogger for Reuters: What happens when you lend 100 people $500 each, for one year, at 10 percent interest, with a 10 percent default rate? You start the year with $50,000. You end it with 90% of the loans paid back thats $45,000 and another $4,500 in interest on those loans, for a total of $49,500. And you also have $5,000 of defaulted loans, which are worth say 25 cents on the dollar. Which means you make a total profit of $750.

On the other hand, what if the term of the loan is six months, but the 10 percent default rate stays the same? Then after six months youve got $45,000 back, plus $2,250 in interest, for a loss of $2,750. And if you run the same program again in the second half of the year, youll lose another $2,750. Instead of being down $500, youre down $5,500.

Yes, youve now got $10,000 in defaulted loans rather than $5,000. But even so, you end the year with a loss of $3,000.

Banks are a business, and their business model revolves around retaining money and making secured loans. They neednt issue quick, short-term money to high-risk borrowers with no collateral.

They dont need to stunt their employees time by having them make collections calls to around 10 percent of all payday loan borrowers who default. Banks, as apparent by the lack of an accessible payday loan alternative, have no desire to enter into this arena.

But What About Credit Unions?

However, Salmon, who, in addition to blogging, serves a board member of Lower East Side Peoples Federal Credit Union, makes the argument that credit unions are different from banks, and that they should provide a payday loan alternative to its members. He points to the purpose of credit unions, which werent established solely for the reason of making money, but instead for the purpose of serving their members. If credit unions members seek out payday loan lenders on the street corner, then the credit unions arent doing their job.

Credit unions exist to service their shareholder-members, explains Salmon in his blog. If those members need payday loans, then it behooves the credit union to find some way of giving them those loans, even if theyre not particularly profitable.

He goes so far to say that credit unions may be prudent to offer payday loans at zero marginal profitor even at a lossif the unions members demand such a service. Adding a service such as this would not only serve a unions members, but it would also help increase membership, as onlookers would see a credit union offering payday loans as a safe haven in the event the individual were to fall on hard times and need access to quick and safe cash.

Finally, Salmon explains that credit unions actually have the capability to issue such loans at significantly lower costs. Due to the fact that a credit union is a bank first and a lender second, they have access to deposits. As a result, they dont need to have a wealthy group of investors providing money as overhead, nor do they have to borrow their money (in a traditional sense) from others and turn it around for profit. Instead, the stock of a credit unions services is constantly supplied and replenished by their members.

Until Then!

But until financial institutions begin offering this service or legislation is passed promoting lower interest rates and fewer rollovers on payday loans, consumers in tight situations should be educated and encouraged to borrower responsibly.

This type of financing shouldnt be used to acquire wants, but rather it should be saved for needs.

Payday loans are perfect for groceries, rent, car payments, medical expenses, or satisfying a late bill that is increasing in size as time passes. When used properly, and under the assumption that a borrower will pay a cash advance off on their next paycheck, this type of financing is not as inherently predatory as many believe.

Rather, they are sometimes necessary when unexpected bills ariseand borrowers should have a legal means of satisfying those expenditures, regardless of their credit scores.

Wed, 11 Jan 2012 19:06:00 +0000alex1893 at http://loans.orgImagine the World Without Payday Loanshttp://loans.org/payday/articles/imagine-world-without-lenders

"[Economists, lawyers, psychologistscareer expertsare] aware that consumers will be driven to inferior substitute credit products if payday loans become less available. They understand that eliminating supply does not eliminate demand. They will want to know what will replace the payday loans that are proposed to be outlawed.They don't care about getting votes."Lawyer Hillary B. Miller Take a moment to imagine the world without payday loans. Given the popular opinion of articles, books, and media news stories, it would come as little surprise if those who were asked to consider this question jumped for joy. Consumer advocate groups would smile and nod as one of entities theyve labeled as their arch-nemesis no longer existed. Good would triumph over EvilDark would be extinguished by the Light.

But is that really true?

Imagine that world again, but this time make sure to take into account everything related to this type of financing. Think about the ease of obtaining money, the demographic that uses this form of borrowing, the requirements to qualify, the consequences payday loan users would face without access to this form of financing, and, finally, the other means payday loan users would turn to for money.

An Introduction to the Debate When the public hears sad anecdotes involving payday loan borrowers who found themselves spiraling out of control with debt, they naturally develop a mob mentality. Mainstream media sources love to herald themselves as public heroes, so they fuel that fire and try to stand up for the minoritythe defenseless. But in doing so, logic and reason are often exchanged for emotion, and, when all is said and done, a bitter opinion is formed without ever allowing the other side of the issue to introduce itself.

Thats not discrediting the sad stories some borrowers have experienced as a result of payday loans.

But to consider those experiences as accurate depictions of all users experiences is to be guilty of the fallacy of hasty generalizationthe father or all forms of bigotry and hatred towards anything.

However, assuming a consumer advocate doesnt mind generalizing, then they would need to explain their stance on borrowers who get caught in a seemingly never ending hole of credit card debt. They would need to justify the fact that people lose their homes to foreclosure. They would have to give a valid explanation as to why car repossessions are permitted. The fact remains, default is not exclusive to payday loans, but rather there are those who succumb to debt traps in all types of borrowing.

Its important to consider all of these other debt traps, because as lawyer Hillary B. Miller wrote in an article, There is no unambiguous research showing that payday loans are bad for a majority of borrowers. People default on payday loans much like people default on any other type of loanbut that doesnt mean the majority are unable to use the service to their advantage.

Eliminating Supply Does Not Eliminate Demand Payday loans are used by those who need cash now. If online and store-front lenders packed up shop, or were forced to close down due to government-imposed regulation, those who need cash now wouldnt, all of a sudden, be relieved of their debt burden. They would still need cash to pay their car

loan, phone bill, grocery bill, or emergency medical expense.

Lets say I get paid on Tuesday, but my rent is due Monday, posed Rachel Schneider, innovation director at the Center for Financial Services Innovation, in a credit.com article. Banning payday loans doesnt solve the very real problem of cash flow mismatch for low-income people.

As Steven Schlein, spokesman for the Community Financial Services Association, further explained to credit.com, If people need a loan, theyre going to get it. They might get it from an illegal web site.

Some may go to the mob. Or maybe they go to a local bar where they hear they can get an illegal, short-term loan.

Inferior Substitute Credit Products One of the most compelling arguments in support of payday lending is that it enables borrowers with no credit and little collateral access to quick cash. Historically, those in need of money that couldnt qualify for loans at legitimate lending sources would turn to loan sharks.

The hidden world of loan sharks is one far more hellish than many realize. Its not simply atrociously high interest rates that borrowers face, but instead they deal with a hostile group of collectors that know no limits when it comes to squeezing payment out of their clients.

For instance, consider the case of Paul Nicholson, a loan shark in Cheshire, England. According to BBC news, Nicholson raped, blackmailed, and assaulted his poverty-stricken clients.

Upon missing but a single payment, Nicholson would show up to his borrowers homes with baseball bats and brass knuckles. If a borrower was female, he would give the option to pay in kind and perform sexual acts for him if they could not keep up with their spiraling debts.

One of his borrowers, a 22-year-old-man named Brian Shields, killed himself over a small loan that, in just three months, skyrocketed to a total of over ten times the amount he took out.

The underground operations of loan sharks were not made up by Hollywood, nor are they exclusive to third-world countries. Whats more is that loan sharking still occurs in our country, despite the fact that there are sources available for quick cash. Imagine the growth that illegal lending would experience if the millions of annual payday lending transactions were prohibited by law.

They Dont Care About Getting Votes These examples and points in favor of payday loans are not meant to shove all complaints about this industry aside. Like most industries, this one is not perfect, and sometimes there truly are victims that are preyed upon by unscrupulous business practitioners. But while the cry of one should never be ignored, it shouldnt necessarily dictate the way the entire industry is treated.

Returning to Mr. Millers opinions expressed earlier, the decision to keep payday loans around and not snuff them out with regulation is something that needs to be considered with an open mind and objective attitude. Miller speaks extensively about the Consumer Financial Protection Bureau (CFPB), lending his support since, in his words, the CFPB and all the policies it has control over would be determined by the CFPBs staff, not an elected official. Decisions wouldnt be made in order to win votes, or to persuade readers to subscribe to a publication. Rather, careful consideration would be used, and all bribes or rewardsvotes, readership, moneywould be set aside.

Future laws and proposed bills pitched by the CFPB will hopefully be made after extensive thought, and a world without payday loans will be considered before trying to actually rid our nation of these lenders.

Tue, 27 Dec 2011 23:24:54 +0000alex1872 at http://loans.orgFight Overdraft Fees with Payday Loanshttp://loans.org/payday/articles/fight-overdraft-fees

When one reaches the decision to open a bank account they are faced with a variety of choices between big name corporations, smaller credit unions, confusing terms, potential monthly fees, different kinds of accounts that yield different kinds of monetary results the choices available and decisions to be made can quickly become overwhelming. While it may be tempting to simply go with the cheapest or most popular options available, it is important for consumers to know what kind of charges, hidden or otherwise, the institution that handles their life savings may choose to impose on them. One such charge, that just so happens to be a charge many bank users encounter, is the overdraft fee.

If a consumer writes a check or makes a withdrawal from an ATM for more than the amount in their account, the bank calls this an overdraft. When an overdraft occurs, the consumer is charged a fee based on an arrangement they have with the bank. This fee can range from a quick $5 transfer fee to a massive recurring fee that holds an annual percentage rate (APR) that makes even the most severe payday loans look like charitable gifts.

Understanding Overdraft Fees Traditionally, loans are given out to consumers only after correct paperwork is filled out and the appropriate signatures are acquired. But overdraft fees, which come in the form of what is essentially a high-priced loan, dont necessarily require any consent; at least not by the traditional sense of the word. Rather, bank users sometimes subject themselves to high overdraft fees and overdraft plans upon opening an account that they are not aware of.

Overdraft fees can be equated to a high-priced loan because if somebody overdraws their account for a small amount, say $25, then they are subject to an overdraft fee. They are essentially paying to borrow the money they did not have. However, even the word high-priced is an understatement when it comes to overdrafts, because these fees are often charged daily. And this isnt a few cents, or even a few dollars. The median price for an overdraft fee according to bankrate.com is $27.

Thats $27 every single day an account is overdrawn.

For the math whizzes out there, that equates to an APR of 3,520 percent. Average payday loans are nearly a tenth of that, weighing in at 370 percent. When it comes to the choice between acquiring a payday loan or overdrawing a bank account, borrowers will almost always come out on top by

getting quick money from a payday lender.

A Valuable Lesson The Chicago Tribune reported a story on a mother who was hoping to teach her son about savings and using banks. She and her son went down to a local bank and opened up a savings account.

After some time, the money in the sons account depleted to a grand total of $4.85not even enough for the ATM to allow him to make a withdrawal. So he left it alone until he could acquire more money to replenish his account. The problem was he failed to take into account the monthly charge on his account.

When the month ticked over, he was charged $9.95 in a monthly maintenance fee, overdrawing his account by $5.10. This threw his account into a downwards spiral in which began to accelerate at an alarming $28 per day.

The kicker? The bank had no obligation to inform him of his overdraft. According to helpwithmybank.gov, a site sponsored by the U.S. Department of the Treasury, individuals are responsible for knowing the amount in their account.

By the time the mother and son duo caught the out of control bank fees, their total bill was $229.10.

Thats a hefty price for what was an initial loan of $5.10.

How to Combat Overdraft Fees There are several options available to consumers when it comes to arranging how overdrafts are handled.

The most common, and unfortunately the worst, is called automatic overdraft protection. The name makes it sound perfect, which is why customers opt for it, or dont even second guess it. Despite the name, however, theres little to no protection offered by this plan. Automatic overdraft protection does not automatically protect the customer at all. Instead, it automatically informs them they overdrew their account after they do it.

So if a bank user has $100 in their bank account, and they try to withdraw $150, theyre permitted to do so. Only after they overdraw their account are they warned that theyve done so. Another way of phrasing that is only after theyve been hit with the average overdraft fee of $27 are they warned theyre guilty of overdrafting their account.

A better way of approaching overdrafts is to open up a second savings account or credit card account that is then linked to a bank customers primary account. In the event that customer overdraws his or her account, the overdraw will then pull from the safety account for a small fee (usually around $5). That way, the customer can use their checkbook or ATM card, and can be confident they will be saved from any recurring payment.

What About Those Without Extra Accounts?

Sometimes consumers dont have enough to fill an extra savings account with buffer money, and sometimes they dont qualify for credit cards. What can be done in this situation?

Bank users should avoid the overdraft fee through whatever means possibleoften times that may

come in the form of payday loans.

The benefit of payday loans is that they are available to virtually anybody who has a job and a bank account. If a consumer knows their account is running low, they should opt for a payday loan over taking an overdraft fee. This is particularly true if they know they can pay either off come their next paycheck. The difference between the average two week charge of $15 on a $100 payday loan and an overdrafts $27 charge is largeespecially to those riding that bank account solvency line.

Additionally, a payday loan can help pull somebody out of the downward overdraft spiral if theyre already caught in an accumulating debt trap. For a two week $100 payday loan, the fee is $15. For two weeks worth of overdraft fees, the average cost is around $378.

While payday loans come with risks of their own, they can be the perfect tool for saving an individual from a sinking overdraft trap.

Tue, 20 Dec 2011 18:57:34 +0000alex1857 at http://loans.orgPayday Loans vs. Installment Loanshttp://loans.org/payday/articles/payday-vs-installment

In the world of short term lending, there is an ongoing feud between the payday lenders and the installment lenders. The internet is riddled with websites from both sides, most of which carry very strong opinions as to what kind of service, payday or installment, is best. But the debate between the two types of financing isnt nearly as cut and dry as some of these lenders wish the public to think.

Instead, there are times when payday loans are more beneficial, while there are other times installment loans are the wiser of the choices. A clear understanding of these borrowing types will help consumers determine whats best for their unique situation.

Payday Loans Payday loans are a relatively new invention, coming into existence in the early 1990s. Originally, they began exclusively as small shops wherein borrowers could visit them personally to apply for quick cash. Today, while those physical shops still exist, many payday loan transactions are done online, from the comfort of ones very own home.

This form of financing requires no credit check, so those with bad or no credit can apply for them without worry. However, applicants must have a bank account, a job, and a minimum monthly income established in the guidelines of each individual lender.

These are secured by borrowers paychecks. The borrower writes the lender a postdated check for however much they wish to borrow plus the fees associated with the loan. For example, on a $100 payday loan, the typical fee is $15. So the borrower would write a check for $115 that the lender can cash come the borrowers next payday.

While a 15 percent interest rate may seem high for a two-week loan, this type of financing allows borrowers with no credit or collateral access to quick cash. Payday loans can help borrowers avoid expensive credit card charges, late fees on bills, and a way to manage unexpected or emergency situations.

Installment Loans Installment loans, on the other hand, have been around much longer than the early 1990s. These were initially offered only by small, independent lenders, but eventually were adopted by most major banks.

Installment loans typically grant borrowers much larger amounts than payday loans. For $1,000 to $10,000, borrowers can approach installment lenders for money to pay off auto bills, home mortgages, or medical charges.

This type of financing doesnt require borrowers to pay their loan off in just two-weeks, but rather can often be taken out for up to a year or more.

However, installment loans usually require some sort of credit check, and arent available to those with very bad credit. Sometimes they require some form of collateral, usually in the form of an automobile or home.

Which is Right for Me? The amount of cash borrowers need should be the first question asked when determining what type they should take out. If its a small amount needed for a quick charge, bill payment, or holiday expenditure, then a payday loan is likely the best bet. But if its a larger amount needed, then an installment loan may be the wisest choice.

If a borrower doesnt have an adequate credit rating, then payday loans may be their only option.

Finally, borrowers ought to make sure they have a payment plan ready for either type. Payday loans can gain momentum and accrue a lot of interest if theyre rolled over (renewed) many times over.

The services provided by payday loans are best utilized when a borrower can pay them off within a single termtwo at the most. Installment loans come with fixed payments, and if a borrower defaults they can be turned over to debt-collection agencies. Sometimes defaulted installment loans can lead to wage garnishments. Also, failure to payback installment loans can negatively impact a borrowers credit score. The flipside to this is installment loans can help improve a customers credit rating if paid back on time.

Mon, 12 Dec 2011 19:08:06 +0000alex1839 at http://loans.orgWhy You Should Avoid Car Title Loanshttp://loans.org/payday/articles/avoid-car-title-loans

Imagine a borrower who is overburdened with bills, has horrible credit, no savings, and no property.

Without any collateral, and a poor financial history, traditional lenders will show him the door long before negotiating terms on a loan. But then imagine this money-strained individual sees a commercial thats reciting lines such as, No credit, no problem, and, Have a car? Then you have money.

Struggling people reach out to help wherever it comes fromparticularly when a helpful hand proves to be a rare occurrence. When banks, credit unions, and other traditional means of acquiring money fail an individual, they turn to those who will. In this case, its a predatory business offering car title loans.

What are Car Title Loans?

Car title loans are a form of financing that offers money to borrowers willing to put their vehicle up as collateral. Because those who have good credit, savings, or adequate collateral have other means of acquiring money in tight situations, car title lenders typically appeal to those with next to nothing.

Consequently, these lenders have received a lot of public scrutiny.

The resounding problem with car title loans is with the way theyre structured. This form of financing is structured with high interest and backed by one of the very few possessions the demographic they appeal to have: their car.

Due to the high interest rates, short payback window, and in many cases, the lenders ability to repossess a car after just one missed payment, those in need of quick cash are at high risk of losing their vehicles and getting caught in an ongoing cycle of debt In this unregulated business, there are scant protections for consumers and no provisions to protect, explains an article from The Daily Press, a Virginia-based newspaper that covers the happenings in various military installments.

When a borrower defaults (and default is exactly what these companies hope for), the borrowers car is repossessed, leaving them without any means of reliable travel or transportation to a job.

Even after repossession, and after their cars are sold, borrowers can still wind up owing money to repay the debt from these loans.

A car title loan survey done by the Consumer Federation of America (CFA) shows the median annual rate charged by title loan stores is 300 percent. Online title lenders have rates up to 651 percent. On top of these extraordinarily high interest rates, these loans are structured to conclude with a large balloon payment.

Once that balloon payment comes, and a borrowers unable to pay it, his car may be subject to

immediate repossession.

One particular company goes so far as to attach mechanisms on all borrowers cars. When default occurs, the company can remotely shut borrowers cars downwherever they may beleaving them stranded in place until the company comes for the vehicle.

And the rate of repossession is no laughing matter: according to the survey, one particular Kansasbased title company repossesses around 10 percent of all its borrowers vehicles.

A Better Alternative Borrowers who do not qualify for traditional loans but are insisting on taking money out should consider payday loans before a car title loan. While payday loans have annual percentage rates on par with car title loans, payday lenders do not require vehicles to back their loans.

But the decision to take a payday loan out should not be taken lightly. They come with debt traps of their own, though not nearly as severe as vehicle shutdown and repossession.

Consumers need to be wary of rolling payday loans over time and time again. If confident they can repay a payday loan in one or two terms, then consumers will not be at much risk at all when taking one of these better-alternative loans out.

Mon, 05 Dec 2011 23:30:15 +0000alex1817 at http://loans.orgAre Payday Loans Really That Bad?http://loans.org/payday/articles/are-payday-loans-bad

There is no doubt that some suffer from the payday loan trap, and wind up getting caught on what seems like a never-ending cycle of debt. Critics of payday loans jump to these borrowers defense and shout about usury, short-term limits, and exorbitant annual percentage rates (APR). But are the countless others who have found much needed help in payday loans being forgotten? If the answer is yes, and if the alternatives for other forms of low-credit lending prove to be incapable, then we must ask ourselves: are payday loans really that bad?

High Interest Rates That Dont Yield Profit Lending is a business, and nobody enters a business to lose money. Those operating in the payday world are no different. But take a look at the service they provide: quick money to those who have good and bad credit alike. In order to give money to individuals with bad credit, there must be some kind of safety net for those operating the business. With payday loans, that safety net is high interest rates.

But with APRs upwards of 400 percent, one would expect all payday lenders to be filthy rich.

However, a study done by both Vanderbilt University and the University of Oxford on the profitability of payday loans reveals payday lenders only see an average profit margin of 10.1 percent a year.

Given the high APRs, this relatively low profit margin can be explained in one of two ways: either theres a very high default rate or borrowers pay their loan off in one term, thus substantially cutting the profit that could result from a high APR. Defaults and Pay Offs Any lender will charge higher interest rates to borrowers with bad credit. Private home loan lenders can get away with granting a 12 percent rate to subprime borrowers because there is a piece of real estate as collateral. Payday lenders, on the other hand, have no collateral. Consequently, they must offset defaults with the profit from those who stay current on their loans.

After all, if you loaned several hundred dollars to complete strangers, and you had the knowledge that those strangers have defaulted many times in the past given their credit score, what sort of interest rate would you charge?

That default rate combined with the fact that those who pay off their loans might be doing so in a single term-limit would also sufficiently explain the low profit margin.

Without discrediting the trouble that some get into by rolling over payday loans time and time again, most payday loan borrowers pay their loan off within two-terms. A payday lending report done in 2009 by the state of Washington found the average payday loan among 29 companies was 19.6 daysjust longer than a single 14-day term.

That means if borrowers took a payday loan for $100 at an APR of 390 percent, they would owe $15 in two weeks. If that borrower paid his loan off just below the average lifetime of a payday loan, the payday lender would only see a 15 percent return on his money.

Couple that average with the number of borrowers who default and its not too difficult to imagine that 10.1 percent profit margin.

Alternative Forms of Quick Cash There are several alternatives to payday loans: small personal loans, borrowing from friends and family, and credit card cash advances are some of the most popular. The problem with personal loans is they usually require relatively good credit. The friends and family option means borrowers loved ones must be willing and able to lend to them. That leaves credit card cash advances.

Cash advances often charge around 30 percent on the money advanced to a borrower. That interest rate equates to far less payment when compared to a payday loan that is rolled over many times.

But that 30 percent rate is quite a bit higher than a payday loans charge if the borrower intends to pay his debt come his next paycheck. A single term on a payday loan is minor when compared to the high rates charged by cash advances.

Credit card cash advances also require a borrower to own a credit card. Many payday customers dont have or dont qualify for a credit card.

The Final Verdict Payday lending is a business that has established certain policies and measures in order to survive.

They provide a service thats sought out by millions each year, and can potentially lift borrowers out of holes and back onto their feet.

Thats not to say there arent nefarious lenders and victimized borrowers. The military has been targeted by a fair share of predatory lending practices, often in the form of payday loans. Other lowincome individuals have found themselves drawn time and time again to the lights of the payday shop inhabiting the bottom level of their residence.

Every type of business has practitioners who try to exploit their patrons and find loop holes in the law, but the bad apples shouldnt spoil the flavor of the batch.

Payday loans can often prove to be a cheaper alternative to other forms of short-term lending. They can also be cheaper than the fees and charges borrowers may face if unable to obtain quick money.

So long as borrowers are responsible about their borrowing practices, and use pay off these lenders in one term (two at the most) then both lender and borrower can benefit from a fair and healthy partnership.

Tue, 22 Nov 2011 21:43:51 +0000alex1789 at http://loans.orgFTC Advice to Borrowers Considering a Payday Loanhttp://loans.org/payday/articles/ftc-advice-borrowers-considering-payday-loan

With the advent of online payday loan services, it can be very easy for borrowers to get caught up in a cycle of recurring, automatic payments being drawn from their bank accounts. Now that instant cash at high interest rates are but a few mouse-clicks away from anybody with internet access, the Federal Trade Commission (FTC) seeks to cushion the risks borrowers subject themselves to by offering advice: 1. Shop around and gather information from various payday lenders and lending sources. Credit unions and small private loan companies often offer short-term loans for rates lower than those offered by traditional payday loan lenders.

1. In order to find the best deal, pay attention to the Annual Percentage Rate. Payday loan interest rates are often expressed in two-week terms, meaning the percentage seen is what a borrower must pay back within two weeks. If a borrower pays the loan off in two weeks, then the interest rate stated is what the borrower will be responsible for. However, if the borrower takes a month to pay off the loan (two two-week terms), then that interest rate is effectively doubled. This two-week term interest rate can grow exponentially if the loan is not paid off on time, leading many to feel a more accurate measure of a payday loans interest rate is the loans APR. The APR will show a borrower exactly how much interest he or she will pay on a payday

loan if they were to hold that loan for one year before paying it off.

1. Sometimes lenders grant extensions on payments if a borrower contacts them and explains their situation and how it has affected their ability to satisfy a timely payment. If an extension is permitted, then the high-interest payday loan may not be needed.

1. Make sure your bank account has overdraft protection. If a borrower seeks a payday loan, the amount in their bank account is likely very low. Payday loan lenders now have the capability to withdraw payment from a borrowers bank account as soon as a loan amount is due, which can lead to overdraft if the funds are not fully present in the account. In the event an overdraft occurs, borrowers are hit with a windfall of payment, as they were subject to a steep interest rate for the loan, and would also be forced to pay their banks overdraft fee.

After prudent investigation and wise selection, borrowers can avoid the inherent risks of online payday loans, and safely work with a payday lender in order to secure money in tight situations.

Mon, 07 Nov 2011 22:38:34 +0000loansorgadmin1756 at http://loans.orgTop Five Risks for Online Payday Loanshttp://loans.org/payday/articles/online-risks

A study released in 2011 by the Consumer Federation of America took a look at 20 online payday lenders and assessed their best and worst practices. The study found that the electronic nature of these online loans can heighten the risk for increased debt and even fraud. Here is a list of the top five payday loan risks the study illuminated.

1. Online payday loan lenders require the borrowers bank account and routing number so that they can access the borrowers bank account electronically. This means that the amount for the loan can be easily and instantly deposited into the account, but it also allows the payday lender to take out the balance to repay the loan in the same fashion.

2. The study also found that some online lenders have the ability to access all accounts under a borrowers name, not just the one he or she provided on the application. This gives the website power over accounts for which the borrower did not necessarily give his or her permission.

3. This kind of payday loan is easier to flip, meaning make the loan a second time. While inperson transactions require the buyer to come into the store again to renew the loan, the study says that online loans are often structured to automatically withdraw only the finance charge and continue the loan for another pay cycle. This can lead to a cycle of debt for the borrower that can be difficult to break.

4. These websites make it difficult for the borrower to repay the loan amount in full. The study shows that most sites set a default option for repayment that has the borrower pay only the finance charge on the loan each month, which is directly withdrawn from his or her account.

Changing this option can be difficult to figure out, and some lenders even require a three-day advance notice if the borrower wishes to pay in full.

5. Because online loan sites often pay up to $110 for referrals, their goal is to get borrowers to

renew their loans rather than repay them in full. Again, this can make it difficult for borrowers to pay off their debts.

Tue, 20 Sep 2011 20:24:10 +0000loansorgadmin1722 at http://loans.orgHow Payday Loans are Different for Military Personnelhttp://loans.org/payday/articles/how-payday-loans-are-different-military-personnel

In recent history, members of the military and their families have often been targeted for payday loan scams, sending them deeper into debt and heightening their financial burdens. The Military Lending Act of 2007, however, placed stringent limits on the relationship between payday lenders and these military personnel.

In its report to Congress in 2006 on the problems associated with payday loans, the Department of Defense stated that approximately 17 percent of military personnel used payday loans to help in tough financial binds, and that using this method for getting fast cash was not beneficial for those individuals or their families. The department recommended that Congress pass a law to protect these individuals.

The bill sets the cap for annual percentage rate (APR) for military borrowers at 36 percent, which includes any fees or charges that may come along with the loan. Lenders cannot use a personal check, debit authorization, wage allotment or vehicle title to secure a loan for military personnel and interest rate disclosure is required before issuing the loan.

The law also prohibits rollovers, same-creditor refinances, renewals or consolidations on military payday loans. Under these regulations, lenders cannot require the military borrower to waive his or her rights or require mandatory arbitration or unreasonable notice provisions.

Individual states are responsible for enacting and enforcing laws to protect the members of the military in their jurisdiction. The federal law comes with civil and criminal penalties for those lenders and also military members who do not comply.

This law does not affect retire service members, those who are no longer on active duty or civilians who work for the Department of Defense. Its stipulations also have an effect on vehicle title loans and refund anticipation loans.

Thu, 15 Sep 2011 22:32:07 +0000alex1701 at http://loans.orgBad Credit or No Credit Check Payday Loanshttp://loans.org/payday/articles/no-credit-check-loans

As with most types of loans, payday loans sometimes rely on a borrowers credit score to determine if he or she is likely to meet the repayment terms. Increasingly, however, payday advance providers are extending short term loans without a credit check, and may also offer loans to borrowers with poor credit or no credit.

In exchange for the convenience of being able to secure a loan without a credit check, however, borrowers are likely to face higher interest rates or fees, similar to the penalties for those with bad credit.

Some payday loan originators decide to lend to borrowers based on proof of employment or bank statements, which may demonstrate the borrowers ability to pay off the loan regardless of their credit circumstances. With such lenders, borrowers can typically anticipate a quick loan application and approval process, though interest rates may be substantial with APR rates, reaching as high as several hundred percent.

When a credit check is involved, some borrowers even those with less than average credit scores may be able to secure more agreeable interest rates, or more attractive repayment terms.

Although sourcing and completing a payday loan without the involvement of a credit check is a growing possibility for the majority of borrowers, a credit check-free application and approval process is not without its disadvantages. However, for borrowers with unattractive credit or for those who do not wish to have their scores reviewed, options for securing quick funds before payday are available.

Mon, 12 Sep 2011 16:08:34 +0000loansorgadmin1683 at http://loans.orgCheap Payday Loans from Direct Lender Companieshttp://loans.org/payday/articles/direct-lender-companies

Though payday loans may all be geared to help consumers secure quick cash before pay day, different cash advances have various benefits and disadvantages based both on their terms and on how they're secured by the borrower. Like other types of loans, payday loans are acquired either

through a broker, who acts as a middleman between the lender and the borrower, or from a direct lender, who acts both as the point of contact for the transaction and the source of the funds.

Cheap payday loans may be found by working with direct lender companies due to the lack of a need to pay for the services of a broker. As a tradeoff, this may result in a less convenient experience for the borrower, as any necessary research or information gathering is more likely to be the responsibility of the loan seeker when a broker is not present.

Cash advances, including same-day cash loans, may offer lower APR interest rates when secured through a direct lending company, though the most common rates are above 600 percent, costing borrowers around $25 per $100 loaned. Through taking the time to locate an agreeable direct lender with attractive repayment plans and reasonable fees, borrowers may be able to enjoy lower charges.

Direct lender companies are likely to require documentation similar to information required by brokers, though additional paperwork or proof of income, such as a series of recent paychecks and verified employment history, may be required depending on the lender's preferences. Direct lenders with strong evidence of a borrower's ability to pay are prone to offering more relaxed repayment terms and cheaper interest rates.

Tue, 24 May 2011 20:25:24 +0000loansorgadmin1661 at http://loans.org Need More Information?

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